Airbus to build military choppers in India with Mahindra

Looks to become first private manufacturer of helicopters in India

Europe's Airbus Group and the Mahindra Group have struck a deal to build helicopters jointly as they bid to win an expected wave of orders from the country's armed forces, the companies said in a statement on Friday.

The two groups will form a joint venture in the coming months, aiming to become the first private manufacturer of helicopters in India, the statement said. It did not say how much the two will invest.

India is in the midst of a huge upgrade of its armed forces - analysts forecast it will spend $250 billion over the next decade - and Prime Minister Narendra Modi wants to encourage more indigenous manufacturing to end India's position as the world's largest arms importer.

Airbus Helicopters, part of Airbus Group, is joining forces with Mahindra after talking to several Indian companies that are investing hundreds of millions of dollars to capitalise on the government's push to build arms at home.

Other companies in the running for the joint venture included Reliance Industries and Tata Group, an Airbus Helicopters executive told Reuters in February.

"Together, we will produce India's next-generation helicopters that will not only answer our country's defence needs but will also have the potential for exports in the future," said S P Shukla, chairman, Mahindra Defence Systems Ltd.

The joint venture will seek to win orders for reconnaissance and surveillance, naval utility and naval multirole helicopters, Airbus said.

Under current rules, foreign ownership in joint ventures in India's defence industry is limited to 49%.