Mahindra and Mahindra (M&M) and global weapon system manufacturer BAE Systems have signed an agreement to create a joint venture defence company in India to focus on land-based systems.
Approved by the Foreign Investment Promotion Board earlier this year, the new company's initial investment will be $21.25 million. M&M will hold 74 per cent stakes and the rest of it will be with BAE, Mahindra officials said today.
The present defence procurement procedure does not allow more than 26 per cent Foreign Direct Investment in the defence sector.
"We are already working together and the benefits for all parties, including the Indian defence and security forces, are clear. We look forward to making a major contribution both to the security and economy of India," Mahindra Group Managing Director Anand Mahindra said here after signing the agreement.
The joint venture company, whose name is currently going through the official certification process, will be headquartered in New Delhi with manufacturing at a purpose-built facility in nearby Faridabad.
The newly created company will also be involved in a number of future artillery programmes, including the M-777 ultra-light howitzer and the 155mm howitzer.