In recent times, offset clauses have become mandatory for procurement of high value equipment from a foreign OEM. Offset agreement is believed to benefit local manufacturing by providing exposure to global markets and adoption of best practices. This practice is especially prevalent in defence procurement of high value equipment. Many researchers have opined that offsets lead to vertical disintegration [19] of supply chain, thereby resulting in percolation of information and knowhow to companies that operate in the lower end of the supply chain. The policy makers hold the view that offset policy has beneficial impact on local economy, job creation, increased tie-ups with global companies and transfer of technology. Another important aspect of such agreements is that the local firms need to conform to global quality standard. However, this stylised theory stands for scrutiny by more number of empirical studies based on hard facts and figures.
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