BANGALORE - Indian defense companies want the country's Defence Ministry to allow foreign companies to own more than 26 percent of joint ventures with domestic firms. They say this limitation is straining existing arrangements and undermining efforts to forge new ones.
But ministry officials are holding firm.
In 2008, state-owned Bharat Electronics Ltd. (BEL) and Rafael of Israel declared their intention to create a joint venture to develop missile electronics. The deal was meant to help Rafael meet its offset requirements for exports to India.
Now, Rafael may pull out unless it can own more 26 percent of the venture, said H.N. Ramakrishna, BEL's marketing director.
Lova Drori, Rafael's executive vice president for marketing, said Rafael would prefer to tie up with a non-state-owned company so that BEL does not obtain more than 50 percent ownership.
The Defence Ministry has refused a request to ease the limit, ministry sources said.
An executive with the domestic industries lobbying agency, the Confederation of Indian Industries (CII), said that without an increase in the limit, no major overseas defense company would be likely to tie up with Indian entities in defense. The executive said that even India's Commerce Ministry favors increasing the limit to more than 50 percent.
A senior Commerce Ministry said that the ministry wants to raise the current limit.
One Defence Ministry official noted that the ministry sometimes grants waivers to the 26 percent limit. He cited the effort by Rafael and the ministry's Defence Research and Development Organisation (DRDO) to develop the Medium Range Surface to Air Missile, in which Rafael received a 50 percent stake.
The official also cited the Indo-Russian development of the Fifth Generation Fighter Aircraft (FGFA), in which Russia received a 50 percent stake.
But some deals do not receive such waivers.
In 2009, India's domestic automobile giant, Mahindra & Mahindra Ltd., part of the $6.3 billion Mahindra Group, formed a joint venture with Britain's BAE Systems, which accepted a 26 percent stake, Defence Ministry sources said.
Last year, the Indian government rejected a plan by EADS and Indian engineering giant Larsen & Toubro to manufacture electronic warfare systems, radar instruments and avionics. EADS was to receive 49 percent equity. The companies are drafting a new plan.
But ministry officials are holding firm.
In 2008, state-owned Bharat Electronics Ltd. (BEL) and Rafael of Israel declared their intention to create a joint venture to develop missile electronics. The deal was meant to help Rafael meet its offset requirements for exports to India.
Now, Rafael may pull out unless it can own more 26 percent of the venture, said H.N. Ramakrishna, BEL's marketing director.
Lova Drori, Rafael's executive vice president for marketing, said Rafael would prefer to tie up with a non-state-owned company so that BEL does not obtain more than 50 percent ownership.
The Defence Ministry has refused a request to ease the limit, ministry sources said.
An executive with the domestic industries lobbying agency, the Confederation of Indian Industries (CII), said that without an increase in the limit, no major overseas defense company would be likely to tie up with Indian entities in defense. The executive said that even India's Commerce Ministry favors increasing the limit to more than 50 percent.
A senior Commerce Ministry said that the ministry wants to raise the current limit.
One Defence Ministry official noted that the ministry sometimes grants waivers to the 26 percent limit. He cited the effort by Rafael and the ministry's Defence Research and Development Organisation (DRDO) to develop the Medium Range Surface to Air Missile, in which Rafael received a 50 percent stake.
The official also cited the Indo-Russian development of the Fifth Generation Fighter Aircraft (FGFA), in which Russia received a 50 percent stake.
But some deals do not receive such waivers.
In 2009, India's domestic automobile giant, Mahindra & Mahindra Ltd., part of the $6.3 billion Mahindra Group, formed a joint venture with Britain's BAE Systems, which accepted a 26 percent stake, Defence Ministry sources said.
Last year, the Indian government rejected a plan by EADS and Indian engineering giant Larsen & Toubro to manufacture electronic warfare systems, radar instruments and avionics. EADS was to receive 49 percent equity. The companies are drafting a new plan.
No comments:
Post a Comment