The government is likely to announce a new defence procurement procedure (DPP) in line with international best practices.
A panel headed by former finance secretary NS Sisodia is working on the suggestions made by various defence hardware makers.
According to a source, a comprehensive report is likely to be submitted to the defence ministry by early next year on the basis of which a final decision will be taken.
Former defence minister Pranab Mukherjee had released the defence procurement procedure in 2006, which for the first time laid down details of the measures to be followed in future for purchasing military hardware.
These measures contained three critical elements: an offsets clause, no single-vendor purchases, and compulsory transfer of technology (ToT) in all big-ticket deals.
Under the offsets clause, 30% of all defence deals over Rs 300 crore have to be reinvested in India?s defence industry.
Several foreign defence manufacturers have often said this clause is restrictive as it narrows down their options. Talking to FE, one of the contenders for the $10-billion 126 MMRCA for the Indian Air Force, said, ?Though the clause in the DPP says 30% offsets for this deal, it has been arbitrarily raised to 50%.?
?The offsets concept is in operation worldwide, and our company has complied with it all over. But the Indian government should have a consistent policy,? they added.
During his farewell visit here Lt Gen Jeffrey Kohler said, ?It will be a challenge to put together a comprehensive and acceptable offsets plan within the DPP.?
He said the issue was not just about percentages but whether this also included the ToT element.
?We estimate the offsets requirement (in the IAF order) to be around $3 million. We suppose this includes the ToT element. If it doesn?t, we?ll have to figure out how to deal with this,? he maintained.