Indian firms eyeing partnerships with foreign defense companies
Prime Minister Narendra Modi's 'Make in India' push is beginning to yield results with many Indian conglomerates exploring the possibilities of a joint venture with major defense manufacturers from abroad. The latest Indian firm to join the race is industrialist Gautam Adani-led Adani Group, which reportedly is in talks with Sweden's Saab AB for a partnership.
The Swedish firm makes Gripen fighter jets, which reportedly is in the race for India's next multi-billion fighter jet order. The other is Lockheed Martin Corp. of the US, which makes the F-16 jets. Saab has promised to build the fighter jets locally if it wins the order. The Swedish firm participated at the Aero India 2017 air show in Bengaluru.
The Indian government has sought proposals for single-engine fighter jets. The plan is to buy 200 of these to help the Indian Air Force beef up its aging Soviet MiG-21 fighter fleet. The deal is expected to be worth about $10 billion. In addition, the Indian Navy is also eyeing fighter jets for its aircraft carriers, which could be worth another $15 billion.
The deal comes after Indian scrapped a multi-billion dollar deal to buy 126-fighter jets after settling for just 36 Dassault's Rafale fighter jets last year.
What's significant, the government now wants to procure these planes (single-engine fighter) under a new method in which a government panel will prescribe a model to select an Indian partner. The Indian company will exclusively manufacture military equipment for a specified period. The foreign partner will be chosen on the basis of transfer of technology and the financial pitch.
"Saab is offering an industrial facility that will be the center-of-gravity for the Made-in-India Gripen. It is an unrivaled offer that will set new standards in aeronautical engineering excellence for decades to come, should India procure Gripen," said Saab India chairman Jan Widerstrom in a statement on February 10.
Sensing a major business opportunity, many Indian conglomerates with interests in the defense sector are now eyeing manufacturing partnerships. Industrialist Anil Ambani-led Reliance Group has already formed a joint venture firm with Dassault Aviation SA of France for the manufacture of 36 Rafale aircraft, which India ordered for $8 billion.
Another multi-sector, Larsen & Toubro and France's MBDA have entered to develop and supply missiles and missiles systems to meet the growing indigenization and demands of the Indian armed forces.
Saab's aeronautics head Ulf Nilsson confirmed the talks with Adani Group to a leading business daily. "We are in discussions, but I won't want to comment at this stage on specifics. We will come back to that (later)," Nilsson told Mint.
The Adani Group showcased its Israeli Hermes 900 multi-role unmanned aerial system under the joint venture called Adani-Elbit Advanced Systems India Ltd at the Aero Show.