Q. Consider the following statements regarding defence offset mechanism:
1.One of its intended objectives is to partially compensate for a significant outflow of a buyer country’s resources.
2.Under this mechanism a buyer is mandated to produce or manufacture weapons tech domestically in India.
Which of the above statements is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: A
  • Statement 1 is correct: Under defence offset policy mechanism transfer of technology is one of its objectives
  • Statement 2 is incorrect: There is no such obligation on a buyer.

The Comptroller and Auditor General (CAG), in a report, defined offsets as a “mechanism generally established with the triple objectives of:

  1. partially compensating for a significant outflow of a buyer country’s resources in a large purchase of foreign goods
  2. facilitating induction of technology and
  3. adding capacities and capabilities of domestic industry

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