BUSINESS

Samtel venture for avionics

Special Correspondent



To partner French company Thales

Samtel will hold 74 per cent stake



NEW DELHI: Electronics major Samtel on Thursday announced a joint venture with the French Thales to make high-end cockpit helmet mounted displays and other avionics for fighter aircraft. While Samtel will hold 74 per cent of the stake, the remaining equity will be held by Thales, in line with the Government’s equity cap on foreign direct investment in the defence sector.

The joint venture plans to invest Rs. 60 crore for the initial foray into cockpit helmet mounted displays and plans to step up funding as it takes up more projects.

A major reason for the joint venture is to help Thales discharge its off-set obligations. Under the offset clause of the Defence Procurements Policy, a foreign company must generate 30 per cent of the value of products in the country.

In case of big ticket projects such as the 126 multi-role fighter tender, the offset obligation has been hiked to 50 per cent.

Significantly, Thales is a major shareholder in Dassault which is offering its Rafael aircraft for the tender. In case it is successful, Dassault will have to discharge offsets worth over $5 billion (Rs. 20,000 crore). But the first test of the joint venture will be with the impending upgrade of Indian Air Force’s French fleet of over 50 Mirage fighters.

Negotiations are in the final stages and the value of the contract is not known but it is certain that Dassault will have to discharge offset obligations.

This is where the joint venture with Samtel will again prove useful for Thales.

Both companies are already partnering the supply of head mounted sight and display for Indian Navy’s MiG 29K fighters. The first batch of the fighter is expected to arrive around September this year.

Samtel officials said the company has an ongoing relationship with the Defence Ministry and the joint venture would open up new opportunities.

Thales is already engaged in a mega project for assembling six French-origin Scorpene submarines in Mumbai.

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