But Western companies have complained for years about India's bureaucratic restrictions and other issues that have hindered better cooperation. An audience member at Mathai's speech, identifying himself as a consultant for companies seeking to compete in the Indian market, complained of costs such as having to hire locals and establish offices in the country just to get started. Mathai professed not to know exactly what the person was referring to but said he thought foreign companies would want offices in India to do business there.
Some companies already take this approach. Thales says its joint ventures in India are structured to give the French conglomerate an edge when competing for defense contracts in the country. Eric Lenseigne, managing director for India, notes that in two recent joint ventures with Indian companies, Bharat Electronics Ltd. and Samtel, Thales has capped its stake at 26%, in line with India's foreign ownership laws for defense companies. But Lenseigne says this also means the work these Indian joint ventures do qualifies for offsets.
Local joint ventures are important for Thales because it is part of the Rafale International consortium, the preferred bidder for the MMRCA program. However, to clinch the deal, Rafale must find a way to meet India's 50% offset requirement. India normally requires 30% offset, but it was increased for the fighter competition.
Samtel already has a strong manufacturing capability in avionics system displays, Lenseigne says. With the Rafale fighter in mind, he says Thales and Samtel are discussing whether their joint venture can manufacture displays and airborne optronic sensors for combat aircraft.
The joint venture with Bharat Electronics, meanwhile, is being established to make civil and defense radars. The plan is to start producing Thales's GM60 ground- and vessel-based radar, Lenseigne says. India has issued many requests for information for ground-based radar for the army, he points out.
Lenseigne also sees an opportunity to integrate Thales airborne and surveillance radars into some of the aircraft being developed by HAL, including the Tejas light combat fighter (see page 70).
As for further industrial cooperation with Indian companies, Lenseigne says, “we are looking at key industrial partnerships. We have identified five companies with which we want to establish privileged partnerships on a project-by-project basis.”
Another reason to develop Indian aerospace manufacturing capabilities is to avoid controversies such as the alleged corruption surrounding the AW101 helicopter deal with Finmeccanica subsidiary AgustaWestland (AW&ST Feb. 18, p. 18). In the $750 million helicopter deal, AgustaWestland has been accused of paying kickbacks worth €50 million ($67 million) to Indian officials to secure the sale of 12 AW101 VIP helicopters to the Indian air force.
India has taken delivery of three of the helicopters, with the remaining nine due to be delivered this year. But Indian authorities put the agreement on hold following the arrest of Finmeccanica Chairman and CEO Giuseppe Orsi by Italian investigators in February. Chief Operating Officer Alessandro Pansa is serving as interim Finmeccanica CEO and Daniele Romiti has been named to lead AgustaWestland, after CEO Bruno Spagnolini was placed under house arrest, too.