Airbus in talks with Indian firms on helicopter joint venture

Is in talks with M&M, Reliance Industries and Tata Group to jointly make military helicopters

Airbus Helicopters said on Friday it is in talks with Mahindra & Mahindra, Reliance Industries and Tata Group to jointly make military helicopters, to comply with rules aimed at helping the nascent local defence industry.

The company, a unit of Airbus Group, is offering to build its light utility AS550 Fennec and the medium lift EC725 for India's armed forces, which are heavily dependent on an ageing fleet of Cheetah and Chetak helicopters.

"We are in the selection process, talking to different industries to form a JV (joint venture)," Rainer Farid, a senior Airbus Helicopters executive told Reuters on the sidelines of the Aero India airshow in Bengaluru on Friday.

Under Prime Minister Narendra Modi's "Make in India" initiative, foreign contractors used to selling directly to New Delhi must form partnerships with local companies and transfer more of the work to help grow the nascent defence industry.

India last year scrapped the planned acquisition of 197 light utility helicopters so that it could launch a new competition reserved for domestic companies that form joint ventures with foreign suppliers.

In addition to Airbus, other firms including US-based Sikorsky Aircraft and Russian Helicopters are also expected to bid for the order.

State-run Hindustan Aeronautics is the only Indian company producing helicopters, meaning that global defence firms are likely to have to partner with a private company building a product for the first time and from scratch.

Airbus executive Farid said that was a concern. "It is a tough task because you need to establish your vendors here which are not as existent as in other countries," he added.

Foreign ownership in joint ventures in India's defence industry is limited to 49%, but foreign companies say majority ownership would speed up India's drive for its own manufacturing base and ensure quality.