Business / Industry Sectors
Israel’s Rafael Forms First India Defense Venture Under Modi
19/02/2015
Israel’s Rafael Advanced Defense Systems will make arms in India with Kalyani Group. The companies plan to start developing and producing advanced missile systems and remote weapons

Israel’s Rafael Advanced Defense Systems Ltd will make arms in India with Kalyani Group in the first joint venture in defense since Prime Minister Narendra Modi eased foreign ownership rules for the sector last year.

The companies plan to start developing and producing advanced missile systems and remote weapons at a facility to be built near the southern city of Hyderabad, said Kalyani Chairman Baba Kalyani, a billionaire whose company will hold a 51 percent stake in the venture.

Modi’s desire to boost domestic defense manufacturing has pushed the world’s largest arms importer closer to Israel, which offers the kind of technology India seeks and an openness to sharing it. Promising to make it easier and more attractive to manufacture in India, Modi raised the foreign direct investment limit in defense to 49 percent from an earlier cap of 26 percent in August.

It’s essential for Indian companies to have tie ups with foreign companies because technology isn’t locally available, Kalyani told reporters at an air show in Bengaluru on Thursday.

It’s also the first such venture between an Israeli and Indian company. In 2012, the Indian government rejected Rafael’s proposal for a joint venture with Mahindra & Mahindra to produce and develop naval defense systems.

India relies on purchases from abroad for 60 percent of its weapons, Modi said on Wednesday. It plans to spend $150 billion through 2027 to modernize its arsenal as state-run companies fail to produce weapons the army needs in border conflicts with China and Pakistan.

Bharat Dynamics Ltd will be the venture’s integrator for anti-tank missiles, according to Kalyani.

 

 

Source: Bloomberg

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