Airbus may partner Tatas for manufacturing defence transport aircraft

Airbus may partner Tatas for manufacturing defence

transport aircraft
French aircraft giant Airbus is...
likely to tie up with the Tatas to manufacture
transport planes for the defence sector,
sources familiar with the development told
The planned partnership is likely to mark the
first big-ticket entry after the Narendra Modi
government raised the FDI limit in defence
production to 49% from 26% to boost
domestic manufacturing and reduce outgo of
foreign exchange.
The proposed entry of Airbus in partnership
with the Tatas puts at rest doubts that were
expressed when the sector was opened up.
The government had faced criticism for not
allowing majority control for foreign partners
and there was an apprehension that global
majors might stay away.
India Air Force has plans to replace its Avros
aircraft, and the Airbus-Tata combine is one
among several groups that are expected to
bid for the contract. An email sent to a Tata
Sons spokesperson did not elicit any
response.
Several Indian companies ranging from
Mukesh Ambani's Reliance Industries to the
Mahindras and Bharat Forge have entered the
defence industry but the Tata Group seems to
have taken an early lead in a segment
hitherto dominated by imports.
The government has embarked on a "Make in
India" campaign to ensure that the country
emerges as a global hub for low-cost quality
manufacturing; the defence sector is a key
element in this strategy.
In August the Union cabinet approved raising
the FDI in the sensitive defence sector and
opened up railway infrastructure to foreign
firms. The cabinet had also decided that FDI
beyond 49% would be allowed in state-of-the
art defence equipment manufacturing, with
technology transfer under Indian control and
management.
Technically, this means 100% FDI is allowed,
but sources said this has been the position
since 2002. As a safeguard, the Cabinet
Committee on Security will approve such
proposals. Sources also said that FDI up to
24% would be allowed via the automatic
route.
Headquartered in Toulouse, Airbus has had
close links with India, a key market for
planes, for a while now. In 1988, Airbus
struck a deal with Hindustan Aeronautics
Limited for the Indian PSU to manufacture
passenger doors for the A320 aircraft. In
addition, Airbus India Engineering in
Bangalore employs 350 local engineers
working in engineering design and innovation
activities; the number working directly or
indirectly on Airbus programmes has reached
some 5,000 Indian jobs, according to the
company's website.
Tata Advanced Systems Limited (TASL), a
wholly-owned subsidiary of Tata Sons, is the
strategic aerospace and defence arm of the
Tata group. It has a tie-up with US helicopter
manufacturer Sikorsky.