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The end of cold war, bring major changes in International Arms market by creating buyer market, where the number of the seller is far greater than the number of the buyers. This situation emerge offset practice or ‘industrial compensation’ from the acquisition of foreign defence equipment. This ‘industrial compensation’ is seek by the developing country, as an opportunity to builds their defence industrialization. This research focused on he offset role on the enhancement of Indonesian defence industrial capability with PT Dirgantara Indonesia as the case study. In general, offset could be divided into two types, direct and indirect, which on both types, transfer technology plays a big role by giving ‘know how’ process to the buyer country. In the practice, there are a lot of consideration needs to be done in demanding offset, like government regulations, defence acquisition process, or strategic industry development plan. The development of strategic industry in Indonesia also used offset as a tool for their industrialization in the process of technological absorptions. For example, PT Dirgantara Indonesia used licensing and joint-venture as its vehicle in mastering technology in designing an aircraft. Not only that, PT Dirgantara Indonesia has also enjoying manufacturing projects as an offset for buying F16 fighter aircraft from General Dynamics. The offset project that has been granted to PT Dirgantara Indonesia brings value to the development of PT Dirgantara Indonesia as Indonesia’s strategic industry, especially in the ability to manufacture and the ability to build an aircraft.