India invites foreign defence firms to set up shop there

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NEW DELHI: India has drawn up a shopping list for tens of billions of dollars worth of foreign fighter jets, armoured vehicles, submarines and helicopters, but it will sign the cheques only if they are made in India.

The world's largest defence importer has announced a new policy inviting foreign defence manufacturers to set up shop as minority partners in India. It initiated the bidding process for submarines in July.

Such deals would boost job creation and bring key defence technologies into India.

Foreign companies have said the opportunity is too good to miss.

Europe's Airbus Group, angling to sell its Panther helicopters, has said that if it wins a contract worth several billion dollars, expected to span at least a decade, it would make India its global hub for the multi-purpose choppers.

Lockheed Martin said if its F-16 fighter jets are selected - it will likely compete with Saab for that order of close to US$15 billion (S$20.5 billion) - it will "support the advancement of Indian manufacturing expertise".

Germany's ThyssenKrupp Marine Systems and France's Naval Group are eager to compete for a contract of up to US$10 billion to build submarines in India.


Luring foreign defence companies to build in India would be a major and much-needed boost to the economy.

Mr Amber Dubey of the KPMG consultancy in India said: "Countries that have a robust defence industry have a few large companies that are supported by their government with large, long-term defence orders.

"They in turn create an eco-system of large and small suppliers to stay competitive."

India imports at least 90 per cent of its defence equipment including parts for assembly. It is banking on foreign companies to bring in new technology.

The Indian government wants to bring local companies up to global standards to compete for the next round of orders.

China built up local defence equipment manufacturing by forcing international firms to link up with Chinese companies and hand over technology.

In India's case, the foreign players are still pushing for ownership.

"Let us take a lead, let us be the majority," said Mr Ashish Saraf, vice-president for industrial development at Airbus.

"Or let the Indian guys assume full liability (as per the policy). Assuming liabilities on an aircraft is not easy...

"If a product fails, we are talking about hundreds of millions." - AFP