The government is holding closed-door meetings with the domestic defence sector manufacturers to address the regulatory and procedural challenges they are facing in coming onboard the high-pitched 'Make in India' bandwagon.

Sources told dna that secretary, defence production and other senior officials of the ministry of defence (MoD) recently met a group of industry representatives for discussions on ironing out such challenges.

To be held periodically, these closed-door meetings have been initiated against the backdrop of the huge potential of the defence offset business that remains to be realised by the Indian manufactures.

Foreign defence deals between 2007 and 2012 helped realise Rs 20,000 crore for offset business in India. Another Rs 60,000 crore is being estimated to be the potential if India drives home the 'Make in India' cart well in defence sector.

Under India's defence offset policy, a foreign contractor having bagged government orders above Rs 300 crore is required to source components from local vendors for at least 30 per cent of that value.

However, issues relating to technology transfer by the original equipment manufacturers (OEMs) and difficult procurement processes are hindrances in reaping the benefits.

Another problem area that the Indian businesses raise is that of the uneven playing field for the domestic industry. The offset business obligations for them, for example, the payment terms, are tougher even as they pay huge taxes and duties for materials and services they buy.

Integration of small and medium enterprises in the entire offset business realm is another area these closed-door meetings will look to address, among other issues, sources said.

Currently, only 40 per cent of India's defence procurement is from domestic industries while the government intends to increase this up to 70 per cent in the next five years. Also, so far, the country's domestic defence industries have earned only about Rs 70 crore by export of military hardware.