Mahindras aim big in defence

By: The Telegraph

Mahindra & Mahindra (M&M) and UK’s BAE Systems will soon start manufacturing the RG-31 — a mine-proof vehicle — in the country for the Indian Army and police forces operating in Maoist strongholds.

Sources in M&M, which has entered the defence automotive business, said the automobile major was also looking at producing the FH77 B05 Advanced Howitzer, already in use in the country.

BAE Systems has supplied 165 mine-proof vehicles to the Indian Army and another 600 to the US, UN and Canadian forces. The monocoque hull of the RG-31, made of welded armour steel, is supposed to protect occupants against anti-tank mines and has a modular interior layout. The vehicle can be configured as an armoured personnel carrier, ambulance and surveillance vehicle. The air-conditioned vehicle can carry up to 10 people.

Maoists have often targeted police vehicles with mines planted deep inside highways and jungle tracks, which normal minesweepers fail to detect. Jharkhand, Chhattisgarh, Andhra Pradesh, Bihar, Orissa and Bengal have been impacted by Maoist attacks.

Though M&M officials have targeted the army as the principle buyer of the vehicle, the company will also chase possible orders from paramilitary forces as well as limited orders from state police forces, especially specialised anti-Maoist squads such as Andhra Pradesh’s Greyhound.

“We are also looking at bringing in a battle tank for the army through our joint venture with BAE but bringing in restricted technology will be possible if we are able to offer them a 49 per cent stake in the venture,” M&M sources said.

At present, FDI rules allow foreign investors a 26 per cent stake in Indian defence. The M&M-BAE venture is complying with the norm.

However, the commerce ministry has put forward a proposal to increase FDI in defence to 74 per cent, a move which domestic firms such as the Mahindras, L&T and the Tatas have opposed.

They maintain that a 49 per cent stake will suffice to attract top firms in defence business and join Indian partners.

M&M has entered the lucrative defence automotive sector with Defence Land Systems Ltd — the joint venture with BAE — and the manufacturing of bullet-proof and customised vehicles. Among others, it makes the Rakshak, a bullet-proof Scorpio, and Marksman, a customised war vehicle.

The joint venture is expected to make an initial investment of $21.25 million over three years. Defence Land Systems India will have a facility in Faridabad, just outside Delhi.