Defence procurement in
India.
India is the market where the paperwork decides the deal. The Defence Acquisition Procedure 2020 sets out exactly when an offset obligation bites — Buy (Global) and Buy and Make acquisitions from INR 2,000 crore upward — and pegs the standard obligation at 30% of contract value, with the Ministry of Defence free to push it to 50%. Just as important is where it does not bite: government-to-government routes and single-vendor cases sit outside the regime entirely, which changes how a supplier structures its approach long before a bid is written. SIRAT analyst desk · reviewed 2026-09-05
At a glance
The framework that governs everything
Capital acquisition runs under the Defence Acquisition Procedure 2020. It categorises every purchase, and the category decides whether offset applies at all. For a foreign supplier the two that matter are Buy (Global) — outright purchase — and Buy and Make, where production moves into India.
What is expected back: offset
Where the estimated cost of the acquisition is INR 2,000 crore or more, the vendor discharges an offset obligation set at 30% of the value of the procurement contract. The Ministry of Defence may set it higher, up to 50%, at its discretion — so the figure in the tender documents, not the standard rate, is the one to plan against.
Where offset does not apply
Offsets do not attach to acquisitions conducted through inter-governmental agreements, through government-to-government routes such as foreign military sales, or to ab initio single-vendor cases. An Indian vendor, including a joint venture with a foreign OEM, also escapes the obligation where the offered product meets 30% indigenous content.
Compiled from the published material of the Indian Ministry of Defence and the Defence Acquisition Procedure 2020, last reviewed 2026-09-05. A public reference note, not an assessment. Something wrong or out of date? Tell us.
India,
through your company.
You have just read the public half. Inside, India is one of 197 markets running the same set of answers.