Offset partners and DRDO cases are different. Offset partner JV company is producing things under license. They do not need to put up heavy investment in R&D and all. Its just to generate jobs and value in the country.They were not allowed to fund more than 50% of the offsets programs, meaning the Indian partner has to match the funding. DRDO didn't want to pay.
The babus at the ministry also shot down 52% of offsets program offers, so that slows down things considerably as replacement programs have to be devised and sent for evaluation.
Its normal for defence contracts. For a small order of 36 Saab is asembling Gripen in brazil with Embraer as partner.
DRDO don't pay to vendor, it's their obligation to fullfill the offset by any means. Transfering technology is an easier way. They will agree upon a certain value for the said tech and offset obligation get reduced when transfered.