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BAE Systems of the United Kingdom plans make its presence felt in India by offering to set-up shop in India and create technology specific to Indian needs and create an export base for India as its long-term goal. Company executives said BAE Systems intends to move away from its conventional role of selling defence equipment from abroad or establishing collaboration. BAE Systems wants to create a company which will be run and managed by Indians.
However, BAE Systems feels that the current cap of 26 per cent on Foreign Direct Investment is stifling India’s potential of growth. BAE Systems had recently formed a joint venture with Mahindra Defence Systems of India and it (BAE Systems) was not allowed to hold the 49 percent stake which it desired. BAE Systems had to settle for a 26 per cent stake in the venture.
BAE Systems is the third largest defence firm in the world and has created formidable alliances with various countries as well as unique set-ups in various countries. In the U.S. BAE Systems has a “Special Security Agreement” with the U.S. government and the BAE’s top-level management in the U.S. is staffed by Americans, thereby keeping the U.S. national security interests of prime importance for the company and top-level managers from other countries are not privy to classified information.
BAE has a similar arrangement with Australia and it wants a similar model for India as well. This arrangement will root-out the issue of technology transfer since the technology will be specifically created for India. This unique arrangement will foster a local supply chain which will eventually become a part of a global supply chain, thereby creating self-sustainability.
BAE Systems had suggested that it is keen to work with Indian firms, Public sector firms and the Defence Research Development Organisation.
Currently, BAE Systems is operationalizing its joint venture with Mahindra Defence Limited. BAE is also bidding for delivery of towed 155-mm howitzers and to develop a tactical communication system for the Indian Army.
Under an earlier collaboration with Hindustan Aeronautics Limited (HAL), BAE has delivered 23 Advanced Jet Trainers (AJTs) and 42 AJTs would be produced by HAL under licence. However, the project has faced certain set-backs and time delays. As of now, India needs an additional 57 Advanced Jet Trainers (Hawk).
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