Indian Defense Ministry changes his policy about military procurement contracts 41910151.

Sources have told ET that the defence ministry is likely to give a go ahead to several amendments in the procurement policy early next week.

The biggest among them is an easing of offset guidelines which require winning foreign vendors to invest at least 30per cent of the contract value into the Indian defence and aerospace sector.

The services industry had been hit with a major blow in May 2013 after the defence ministry had put a stop to services being treated as eligible offsets, effectively cutting out thousands of crores of business for the sector.

The suspension was ordered after the investigations into the VVIP chopper deal that pointed to the services route being used to channel funds.

However, with a strong demand from the industry, the government is now set to restore five out of the seven categories of services that are eligible to be counted for offsets. These include maintenance, repair and overhaul (MRO), engineering, design and testing, upgradation, training and research and development.

The two services likely to be dropped are software development and quality assurance. A final decision on the matter will however be taken by Defence Minister Manohar Parrikar.

The reinstating of the services clause has the potential to be a game changer for new defence players, especially in the MRO and upgradation sector.

At present $4.87 billion worth of offset contracts have been signed and the potential value till 2028 is $15 billion.

Besides the services reinstatement, the defence ministry will also deliberate on other recommendations of the Dhirendra Singh Committee report, including providing a level playing field for Indian manufacturers competing for defence contracts with foreign vendors.