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Manufacturing components with an Indian partner for the proposed $700-million initial gun order of 145 M777 howitzers is set to benefit BAE Systems.
The intended Foreign Military Sale between the US and India will also bring into play defence offset rules under Make in India, which BAE Systems will have to abide with.
Around 40 Indian defence companies stand to gain with the M777 offset programme, focussed on localised defence production, and which will be worth 30 per cent of the agreed value of the contract. BAE Systems has been preparing a wide ranging offset package.
“We have an ongoing conversation with Indian companies,” said a company spokesperson, adding: “As part of the offset programme, we have included a range of suppliers.”
Stating that the company was asked to submit an offset plan “which has references to who BAE will partner with” the company said it is working on bringing several Indian partners on board to support its anticipated contract for the M777 artillery guns.
Among the marquee Indian names that BAE Systems has held talks with are corporates like L&T, Punj Lloyd, Ordnance Factory Board, Tata Power, Kalyani Group, Mahindra Group and others. Sources said the emphasis would be on State-owned defence public sector undertakings and medium, small, and micro enterprises in the defence arena.
The spokesperson confirmed that the partnerships would facilitate the production of a variety of BAE Systems’ defence products in India.
The deal is set to involve technology transfer to the Indian partner, as well as “ensure capability in technical skills, along with integration.”
Sources indicated that the proposed deal is expected to enable BAE Systems to make a long-term investment in India, apart from its $200-million offset investment.
With BAE Systems agreeing to shift the main production unit of the howitzer to India, its existing M777 facility is located at Hattiesburg, Mississippi, US, where around 70 per cent of the howitzer’s assembly is completed, the new facility in India is slated to be its main hub to undertake global orders.
Local supply chain The tie-up with Mahindra and other Indian partners is set to help the company develop an Indian supply chain that could be used for the British multinational’s air, land and sea programmes. The Mahindra deal will also begin the process of indigenous manufacture of modern artillery in India.
The Ministry of Defence had approved the procurement of the M777s in May last year, along with Selex Laser Inertial Artillery Pointing Systems (LINAPS).
The guns are to be operated by the Indian Army’s 17 Mountain Strike Corps.
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