European conglomerate eyes India’s burgeoning defence market

February 25th, 2008 - 8:22 pm ICT by admin  

New Delhi, Feb 25 (IANS) European aerospace and defence conglomerate EADS is eyeing India’s burgeoning military market that is expected to generate orders worth Rs.155 billion ($4 billion) over the next five years, but admits to “issues” relating to the country’s stringent purchase requirements. The European Aeronautic Defence and Space Company also questions the economics of India insisting on licensed production here of military hardware, even as it says it would work with the government to find a way around such issues.

At the same time, EADS, whose group companies manufacture civilian and military passenger jets, helicopters and combat jets, as also missiles, satellites and rockets, says it wants to establish an Indian footprint because “we want to participate in your industrial growth”.

“We are latecomers so we have to offer more convincing products. We are offering cutting-edge technology products in a win-win situation for both of us,” Stefan Zoller, CEO of EADS Defence and Security, told reporters here.

Questioned whether the group would be willing to transfer 100 percent of this technology, as mandated by India’s Defence Procurement Procedure (DPP) unveiled in 2006, Zoller, also a member of the EADS executive committee, resorted to the diplomatic path.

“We realise this is a very sensitive subject for India. We are aware that expectations are high on transfer of technology. There have been discussions. There is some way to go and we are optimistic,” the official maintained.

Among the products EADS has offered are the Eurofighter Typhoon for an Indian Air Force (IAF) order for 126 multi-role combat aircraft and the Eurocopter Fennec for an Indian Army order for 197 light helicopters, as also missiles and electronic warfare systems.

The Fennec deal, in fact, had almost been signed when the defence ministry abruptly cancelled it late last year, citing deficiencies in the selection process.

“We are obviously not pleased to find ourselves out of a deal that we had almost clinched,” Zoller said, adding: “We will go on in this country to develop all our businesses. We have to go further and we aim to be a real strong Indian player.”

His statement on the economics of licensed production in India came in the context of the Indian Army and IAF orders. In both cases, the request for proposal (RFP) that has been sent out to foreign manufacturers specifies that the first 18 aircraft would be acquired in flyaway condition and the remaining would be manufactured here.

“That does not make for good economics because if you consider the huge investments on infrastructure that would have to be made, it does not make sense because it would considerably drive up the cost of the product.

“One has to go further,” he added, without specifying whether he meant exports or manufacture of greater numbers.

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