Source:-Adani-Ambani face off: How Modi’s Make in India set the stage for defence rivalry in India
The JVs are formed at a time when India, the world’s top defence importer, is conducting a USD100-billion upgrade of its Soviet-era military hardware. All the MiG 21s and MiG 27s in the Indian Air Force (IAF) arsenal is due to retire by 2025. IAF has 33 squadrons of fighter aircrafts and the numbers are dominated by single engine fighters.
Modi government has raised the limit on foreign investment in the defence sector and encouraged tie-ups between foreign and local companies under the ‘Make in India’ campaign where the Indian partner will remain the majority stakeholder. India currently imports at least 90 per cent of its defence equipment including parts for assembly.
India in 2016 agreed to buy 36 Rafale combat planes for around USD8.9 billion. Some of the major JVs formed for win a slice of the defence pie are:
Adani – Saab
Sweden’s Saab tied up with Adani Group to bid for defence deals in India, with a focus on manufacturing Gripen fighter jets in the country. “Our plans in India are to create a new defence eco system that would involve many partners, vendors and suppliers. Building new fighters is very similar to doing high technology projects in energy sector,” said Hakan Buskhe, president and CEO of Saab.
The partnership will compete with U.S. defence giant Lockheed Martin in a two horse-race to win a potential order from India’s military for single-engine jets that will be produced locally. Together with the Adani Group, Saab will bid to make about 100 single engine fighters for Indian Air Force (IAF), a contract worth USD 15 billion.
So far, Adani has no presence in the defence sector and no experience in the manufacturing space either.
Gripen E fighter is Sweden’s answer to the F-35 of Lockheed Martin. The E fighter, the sixth variant in the Gripen family, is slightly bigger than previous versions, has a stronger engine and updated radar systems. It is designed to carry more weapons further, and to track multiple threats using the latest type of radar.
Since 2015 a clutch of Adani executives were negotiating with the representatives of overseas defence giants for tie ups, pitching the group’s mainstay asset – the country’s largest private port and SEZ at Mundra in Gujarat – with its sea and land linkages as a possible manufacturing location. The discussions in some cases were led by Karan Adani, the elder son of billionaire group chairman Gautam Adani.
In 2015 February, the group applied to the department of industrial policy & promotion (DIPP) for a licence to manufacture helicopters under a new entity – Adani Defence Systems & Technologies. Marking its formal entry into defence, the company signed a statement of intent with Elbit-ISTAR of Israel to work together in the field of unmanned aircraft systems (UAS), commonly known as drones.
Under the agreement, the companies plan to set up a final assembly and integration line, including MRO (maintenance, repair and overhaul) facilities by incorporating true transfer of technology for supporting the product range during its lifecycle.
Reliance – Dassault
Large scale entry Reliance Group of Anil Ambani into defence sector was in 2015, when he took controlling stake in Pipavav Defence and Offshore Engineering Co, which made warships and energy exploration vessels. It was later renamed as Reliance Defence and Engineering. Since then, Reliance bought large land parcels to build an aerospace facility and signed more than half a dozen joint venture agreements with foreign companies, including the big one with Rafael Advanced Defence Systems of Israel.
Reliance Aerostructure’s incorporated a 51:49 joint venture with Dassault Aviation, with the aim of becoming a key player in executing the offset obligations arising out of the 7.87 billion euro deal for Rafel fighter jets. India and France signed a purchase agreement for supply of 36 Rafale fighter jets for 7.87 billion euros in September last year and the contract includes a 50 per cent offset obligation about Rs 30,000 crore, the largest ever offset contract in India.
DRAL has finalized the infrastructure requirements at Dhirubhai Aerospace Park at Mihan, Nagpur and the production is expected to start by end of the this year.
Reliance Defence, in April, entered into a strategic partnership with a leading South Korean defence major for jointly manufacturing military hardware. As part of the agreement, Reliance Defence and LIG Nex1 will explore opportunities for developing a range of defence products such as air defence and surveillance radar, sensors and missiles. The cumulative value of projects being targeted by the two companies will be worth multi billion dollars. LIG Nex1 is a leader in manufacture of smart heavy weapons in categories of anti-ship missiles, anti-tank-guided missiles (ATGM), and guided rockets.
According to reports, Reliance Defence and Engineering also plans to manufacture Kalashnikov class of weapons for Indian armed forces in a joint venture with an Israeli company. French defence company Thales, which is a world leader in underwater systems and a close partner of DCNS, is looking at building a range of systems with Reliance Defence, including sonar for surface ships and submarines, mine warfare and mine counter-measure equipment, reports said.
Reliance Defence has an agreement with French shipbuilder DCNS. The defence ministry is gearing up to award a Rs 20,000 crore contract to build four amphibious warships under the Make in India programme. Reliance Defence and L&T are in the fray to bag the order.
Reliance Defence will also work with Russia’s state-run arms manufacturer Almaz-Antey on the entire range of air defence systems required for India. The two companies will work together on air defence missile systems, (including the TOR-1M missile programme) radars and automated control systems.
Larsen & Toubro- MBDA
Engineering conglomerate L&T formed a joint venture (JV) with France’s MBDA to develop and supply missiles and missile systems to the Indian armed forces. MBDA is jointly held by Airbus Group, BAE Systems and Leonardo and has expertise in developing all kinds of missile systems.
In the joint venture, L&T has controlling stake of 51 per cent while MBDA holds the rest. The move to set up a joint venture comes in the wake of the Indian government deciding not to buy missile systems from overseas but source it domestically.
“To begin with, the JV company will look to develop and supply fifth-generation anti-tank guided missiles for coastal and high-speed target drones,” both companies said in a joint statement.
Tata Advanced Systems-Lockheed Martin
US aircraft major Lockheed Martin signed an agreement with Tata Advanced Systems (TAS) in June to produce F-16 fighter planes in India. The American giant has a plan to shift its Fort Worth, Texas plant to India to win billions of dollars worth of order from the Indian military. They also plan to export the F-16 from the Indian plant.
The multi-role F-16 has been in production since 1978, with Lockheed so far producing a total of 4,500 units of the aircraft of which 3,200 are currently in service across the world. TAS, a subsidiary of Tata Sons, already runs manufacturing partnerships with several global players, including Boeing, Airbus and Sikorsky.
Mahindra – Airbus
Airbus Helicopters, last year, awarded a contract to Mahindra Aerostructures to make airframe parts for the AS565 MBe Panther helicopter. These parts will be produced at the Mahindra facility in Bengaluru. They will be shipped directly to the Airbus Helicopter production line in Marignane, France where they will be integrated with the rest of the airframe assembly and will form a critical part of the Panthers sold worldwide. The contract positioned Mahindra
Aerostructures as the first Indian company to receive a direct manufacturing contract from Airbus Helicopters as a Tier 1 supplier.
Source:- Business Today
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