France's Safran Shelves Plan for Rafale Fighter Project in India

Day Two Of Dubai Air Show 2015

A Rafale fighter jet.

Photographer: Jasper Juinen/Bloomberg
  • Safran was considering making Rafale jet-engine parts in India
  • Prime Minister Modi scaled back purchases of the combat plane

France’s Safran SA has shelved plans to make engine parts for Rafale combat aircraft in India after Prime Minister Narendra Modi scaled back purchases of the warplane.

The company won’t make the components with state-run Indian defense contractor Hindustan Aeronautics Ltd. since the nation has ordered only 36 jets rather the more lucrative 126 originally mooted, according to Safran’s India Chief Executive Officer Stephane Lauret.

"The plan we’re supposed to do in Bangalore, we won’t do it for this 36 aircraft deal," Lauret said in an interview in New Delhi. "But we’ll continue to have other business with them. We have other projects with Hindustan Aeronautics."

The Paris-based business in February said the companies were in joint venture talks to build a 30,000-square-meter plant for jet engine components in India, focused first on the Safran engines powering Dassault Aviation SA’s Rafales. The impact of the scaled down Rafale order shows the challenge Modi faces of turning interest in local arms manufacturing into actual output, as the nation strains to fund defense modernization.

Multiple calls to Hindustan Aeronautics spokesman Gopal Sutar seeking comment went unanswered.

Modi has eased restrictions on foreign direct investment in defense manufacturing since taking office in May last year. He’s cleared plans to acquire about $60 billion of weapons, with talks to finalize the purchase of the 36 Rafales continuing. The premier is striving for increased regional heft to counter neighbors China and Pakistan.

India’s need for new jets is increasingly urgent: About a third of its 650-plane fleet is more than 40 years old and set to retire in the next decade.

Policy Steps

Modi’s policy steps have stirred interest. Boeing Co. and Tata Advanced Systems Ltd. said Nov. 9 they plan to make aircraft parts jointly in India, including the body of Apache attack helicopters. Germany’s Atlas Elektronik GmbH is tying up with one of billionaire Anil Ambani’s defense companies with a goal of making an advanced torpedo locally.

Safran’s other objectives in India include offering maintenance and repair services for aircraft engines, Lauret said in the interview last month. 

Civil Engines

"We’re looking at manufacturing parts of our civil engines in India," he also said. "We’ll have more partnerships with private companies."

India may purchase a type of Russian military helicopter powered by Safran engines. The company says it employs more than 2,600 people in India across eight businesses and joint ventures.

Shares in Safran, which makes engines for Airbus Group SE and Boeing short-haul jets, have climbed about 29 percent this year. They fell 0.4 percent as of 9:10 a.m. in Paris.

"I came to head Indian operations more or less with Modi coming to power," Lauret said. "Defense deals could move faster, but things are moving."

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