Saab in Hunt for India Partner to Help Modi Overhaul Forcesby and
Move follows Modi administration’s move to ease FDI in defense
Saab expects to sell about 450 Gripen jets over next 20 years
Sweden’s Saab AB will join Lockheed Martin Corp. and Boeing Co. in the search for local partners to help build its fighter jets, as competition increases for a slice of India’s planned $150 billion military modernization.
While certain parts of the Gripen E planes will be built in factories fully owned by Saab, other components will be manufactured jointly, said Jan Widerstrom, chairman of Saab India Technologies Pvt. The Adani Group could be among companies being considered, the Economic Times reported in May, without saying where it got the information.
"We are talking to at least six large companies in India as the main partners, and several hundred for the supply chain," Widerstrom said in a July 7 interview in New Delhi. "We are still evaluating our partners and most likely we need more than one."
India is expected to announce a contract for fighter jets next year, with local production in focus as Prime Minister Narendra Modi looks to create jobs and reduce the world’s highest arms imports. Soon after taking office in 2014 he allowed more foreign direct investment in defense and, last month, he further eased rules for the sector.
Under the latest tweaks announced June 20, foreign companies can hold more than 49 percent of a company based in India even if it doesn’t provide state-of-the-art technology. Concerns exist, though, on whether local companies have the trained workforce to deliver.
"There exists an ecosystem, but that ecosystem needs to develop further,” said Pushan Das, a junior fellow at the Observer Research Foundation think tank in New Delhi.“Indian companies are yet to acquire the manufacturing wherewithal to manufacture complete military grade aircraft platforms.”
Moreover, the airforce would probably prefer a two-engine craft rather than the single-engine Gripen, he said. Saab had lost out to Dassault Aviation SA for that reason in 2007, when India had last sought bids for fighter jets, before talks stalled on the deal partly because India sought quality guarantees for the Rafales made locally.
Saab may have it easier. It has a center with Tech Mahindra Ltd. in the southern Indian city of Hyderabad, where more than 100 engineers are already working on the design and development of Gripen jets for Brazil. It will also build on its existing partnerships, such as an aerostructure venture with Indian company Aequs, Widerstrom said.
Saab has also offered to help India with its indigenous Tejas jet, as well as the Advanced Medium Combat Aircraft program, which seeks to design and build a fifth-generation fighter.
Defence Minister Manohar Parrikar has said the country needs local production lines for at least two types of fighter aircraft. The government says 60 percent of its defense requirements are currently met by imports.
‘Next 100 Years’
Even as India faces geopolitical threats from neighbors Pakistan and China, a third of its 650-strong combat airfleet is over 40 years old, and the Tejas was 33 years in the making.
India was the world’s largest arms importer, according to a February 2016 report from the Stockholm International Peace Research Institute, in part because its companies have failed to produce competitive, indigenous weapons.
Saab would want a 100 percent investment in an Indian project in the coming years, but for now would prefer working with local partners in both the private and public sectors. It will also offer a transfer of technology, Widerstrom said. The company expects to sell about 450 Gripen jets worldwide over the next 20 years.
"We see it as part of our overall ‘Make in India’ package," he said. "We are offering an aerospace capability for the next 100 years."