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Thrilled to see PM Modi revitalise defence procurement: BAE’s Roger Carr

YB WEB DESK. Dated: 1/31/2018 7:05:56 PM

After delivering 2 Howitzer guns from UK and US ahead of schedule, BAE Systems and partner Mahindra are getting ready to build the M777 artillery guns locally in India from third quarter of 2018, and the first Make in India gun by mid 2019, said a top official of the UK defence major.
The company is also in active negotiations with the Indian government to deliver the enhanced Tech Demonstrator Advanced Hawk jet trainer aircraft as a follow on order. These can also "become a springboard for exports to parts of the part," said Sir Roger Carr, chairman, BAE Systems in an exclusive interview with ET in Davos.
The growing business opportunity in the country - the world's largest importer of defence equipment in the world - has also made the UK multinational consider introducing its new "expertise in maritime area," to target the needs of the Indian navy.
"Our primary markets at the moment are America, United Kingdom, Saudi Arabia, Australia and India. We have been in these markets for round about half a century and have deep roots there...We are thrilled to see that the leader of India focussing on an opportunity, putting his energy and effort into liberating something (defence procurement) that historically was very slow and bureaucratic," said Carr, who was among the group of global executives invited for a private dinner with Prime Minister Modi at the recently concluded World Economic Forum.
At that meeting, he did raise some issues regarding the offset programme that is limiting for many defence industry heavyweights. Currently the rules only allow a single company to deliver the offset rather than the group of which that single company is a part of. "We think this is very limiting for India, it makes life more complicated need, and we've recommended that that issue is reviewed and turned into a group wide commitment rather than a single company subsidiary commitment," argued Carr but added, "I've spoken to people this week, people engage, there is an understanding that this is important for India, it helps speed up the process and flow of a transaction and then the delivery of the offset and I think that we will see progress in that area too."
BAE Systems are to deliver 25 ready build ultra light M777 guns to beef up the Indian artillery arsenal and follow it up with another 120 that are to be assembled and integrated at the Mahindra facility in New Delhi. The company has an offset commitment of over $200 million on the M777 programme through which it plans to open opportunities for the Indian supply chain both locally and globally, creating jobs, enhancing skills and building advanced manufacturing capabilities in India. The establishment of the assembly, integration & test facility with Mahindra will further grow the local industrial capacity of India. This one-of-its-kind facility is a fundamental part of the production line of the Howitzers and will enable the Indian army to access maintenance, spares and support for the M777 locally.
Describing their local partner the Mahindra Group as one with great capabilities and high quality skills, Carr said as a company they share good rapport with other Indian conglomerates as well and would be open to explore business tie-ups in areas like maritime. Recently BAE's top management flew down to Mumbai to meet Anil Ambani and the Tata Group. "We've had good conversations with the Tatas....we are in conversation with a range of people and given the India potential we want to have great partnerships," he elaborated. But the final JV commitment will be dependent on the "volume of business available" and the actual delivery capabilities of a local associate.
The in-country manufacture of the Hawk advanced jet trainer in collaboration with HAL for the Indian Air Force (IAF) and the Indian Navy is a successful demonstration of the Indo-UK aerospace partnership to Make in India. The programme was launched in 2004 and till date more than 120 Hawk Mk132 aircraft have been delivered to the IAF and the Indian Navy.
Building on the success of the Hawk Mk132, BAE Systems with HAL has developed an Advanced Hawk. Debuting in the 2017 edition of Aero India, this is the latest development of the world's most successful jet trainer.
"We have ambitions to sell many over a period as we have done with the traditional Hawk but the initial batch is in sort of like half a dozen aircraft. It's a small start but a long opportunity," Carr told ET over coffee and croissant, while describing the ongoing negotiations.
More importantly, export potential will be the bonus. "We see the Indian production as an export base opportunity and the capability and the product is second to none," he said.
BAE is also seriously evaluating the new naval requirements. Historically, the company has worked with the Leander frigate and can offer the full spread. "For surface ships that are relevant to offshore patrol vessels, we think, we have the capability. We are building in the UK something called the Type 31 which is going to be built as an export product. So it will be fit for purpose but serious value for money, that's a product we're seeking to develop in the UK and that kind of design may be relevant to other countries," said Carr, while ruling out its portfolio of nuclear submarines.

Talking about the broader trend of manufacturing strategic weapons in the user country, Sir Carr felt building "sovereign capabilities is a reasonable" demand made by governments around the world. As a corporation too, BAE sees itself as a partner and not a mere export of defence equipment. "Our history here is actually about transfer of skills and capability and technology. The technology is transferred, the build is local, and the customer is India. So it's tried and tested," he said.


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