Partnerships Between Indian, Foreign Defence Companies Gather Pace

Partnerships between Indian and foreign arms manufacturers have shown a distinct upward trend in the past few months.

Perhaps enthused  by the hike in foreign investment limit from 26% to 49% and the Modi government’s thrust to domestic manufacture of defence equipment, an increasing number of international firms are scouting for local partners.

In October, Zen Technologies announced it was partnering with Rockwell Collins to combine their strengths in simulation and training to provide solutions to Indian military customers.

“Our relationship with Zen Technologies allows Rockwell Collins to offer superior end-to-end solutions that militaries utilize throughout the world,” said Le Ann Ridgeway, vice president and general manager, Simulation & Training Solutions for Rockwell Collins.

Just before that, Bharat Electronics Limited (BEL) and Thales announced that the Indian Ministry of Corporate Affairs approved the incorporation of their joint venture company, BEL-THALES Systems Limited, in late August this year.

This joint venture (JV) Company will primarily focus on the design, development, marketing, supply and support of civilian and select defence radars for India and the global markets. The first board meeting of BEL-THALES Systems Limited took place to announce that BEL holds a 74 % stake while Thales holds 26% of the equity in the JV Company.

Mumbai-based Pipavav Defence & Offshoring Engineering Company (PDOC) and Germany’s ATLAS ELEKTRONIK announced in February that they are teaming up to build new Heavyweight Torpedo for the Indian Navy.

PDOC and ATLAS will create a Joint Venture (JV) company in which ATLAS undertakes Transfer of Technology while PDOC will handle domestic manufacturing and business development. PDOC has begun the process of identifying domestic medium and small-scale enterprises to leverage India’s existing base of expertise, a joint statement said.

The JV partners also envision creating a Center of Excellence for Torpedo Technology with the DRDO and leading Defence PSUs such as BEL and BDL. Thus, this cooperation will go beyond licensed production and promote domestic absorption of advanced technology to pave the way for a truly indigenous Indian torpedo.

In September, India's Bharat Forge and Israel's Elbit Systems announced a joint venture - BF Elbit Advanced Systems Ltd– to focus on the Army’s artillery requirements before expanding into more advanced equipment for all three services. The JVC will develop products like the Advanced Indian Gun System. 

Meanwhile, Airbus Defense is pursuing a JV with the Tatas to manufacture transport planes for the defence sector. According to reports, the Airbus-Tata partnership could be one of many to bid of the IAF’s Avro aircraft replacement tender.

However, Indian Industry is wary of the face of partnerships if the foreign company gets blacklisted on bribery charges. DA Mohan, former Director BEL and CEO, DAC international, raised concerns about the domestic companies that partner international defense companies which get blacklisted during a discussion at the Deftronics 2014 exhibition in Bangalore, India.

He said, “What is the condition of the private Indian defense firm when its international partner company gets blacklisted for various reasons? The domestic companies have to bear the loss of losing out of the project when their international partner defense companies are blacklisted for various reasons. Besides that, the private companies with no fault of theirs are not compensated for their losses.”

The FICV project was approved nearly five years ago. Since then, India’s Mahindra Defence Systems has tied up with BAE Systems, Larsen & Toubro is working on overseas tie ups, and Tata Motors is also working to connect with overseas companies after its tie up with Rheinmetall was stalled following the blacklisting of the German company. 

Meanwhile, Moscow has suggested that New Delhi consider its offer of setting up a joint venture to assemble Russia’s Kamov helicopters in India, Russia’s deputy prime minister said last November.

“We have a serious proposal for India which refers not only to purchases of Russian helicopters. Russia as India’s strategic partner proposes setting up a joint venture, including on India’s territory,” Dmitry Rogozin said.

During a visit to India in December 2012, Russian President Vladimir Putin to India, Russian Helicopters and Elcom Systems Private Limited, part of the Indian investment conglomerate SUN Group, signed an agreement to set up a modern industrial facility for manufacturing of Russian helicopter models, namely helicopters of the Ka- and Mi- brands in India.

According to reports, the joint venture will have the capacity to produce key helicopter units and carry out final assembly of the machines as well as engage in ground and flight testing. It is expected that the enterprise will start with production of components for the multirole Ka-226T helicopter. The enterprise will serve as an industrial base for hi-tech Russian rotorcraft products in India.

However, the status of this project remains unclear.