BAE Systems awaits govt nod to pick 49% stake in Mahindras
UK's largest military systems manufacturer BAE Systems today said it is awaiting the government's approval for picking up a 49 per cent stake in a defence joint venture with Mahindra group.
India has restricted foreign participation in domestic defence production in the private sector to about 26 per cent and the government is already debating the possibility of allowing foreign companies to pick up 49 per cent stake.
"We are picking up a 49 per cent shareholding in M&M's defence venture, for which we have sought clearance from the Indian government," BAE Systems India's newly-appointed president Julian Scopes said here today.
BAE Systems' proposal needs to be cleared by the government's Foreign Investment Promotion Board (FIPB).
Due to the restrictions, BAE Systems has sought an exception to the rule from the government, as it has done in the case of some Defence Public Sector Undertakings (PSUs).
"Rules say exceptions can be made. We have made the request through the FIPB in May-June this year and are in discussions with the government. The Indian Defence Ministry has an important say in this regard and we are waiting to hear from the government on our request," Scopes said.
Under the arrangement with automotive-to-technology conglomerate Mahindras, BAE Systems would bring in global intellectual capabilities in land vehicles systems, particularly in the area of mine protected vehicles for which the British major has done advanced technology development work in South Africa.
With India's need for mine-resistant vehicles on the rise, BAE Systems sees greater scope for their business to expand in the Indian defence market, he said.
"Mine protected vehicles apart, BAE Systems can bring in expertise to Mahindras in Artillery systems too. BAE Systems has varied experience in air, land and sea platforms and systems integration, which could be a spin-off of the tie-up with Mahindras," Scopes said.
He, however, pointed out that the issue of restricted ownership of defence assets was already "frustrating" several private industries eager to enter into an agreement with foreign manufacturers.
"We are not demanding from the government to allow 49 per cent stake to foreign companies in Indian private defence industry, but have only put up our case before it," said Guy Douglas, BAE Systems India head of communications, who was present during the media interaction.
Stating that his company was implementing new strategic approach towards India, which was a key defence market to operate, Scopes said BAE Systems was here in New Delhi to be part of the Indian defence industry.
"We are not here just to sell, but to be an integral part of India's defence industrial base. We have come here to establish ourselves through partnerships and joint ventures with Indian private defence industry, employ Indians and develop equipment for the armed forces and exports. We want to do design and development, manufacture, and export businesses in India," he said.
BAE Systems, as a company, has changed in the last eight years, Scopes said, pointing out that it had significant operations not just in UK, but also in other parts of the world such as US (becoming the 6th largest supplier to US' Pentagon), Australia, Saudi Arabia, South Africa and Sweden.
Us Indians have this sunny disposition, no matter how many times the DRDO has failed to deliver on their many promises, we keep leading with the chin.[/color]Here's hoping that they make it this time.
