Bangalore: Public sector Bharat Electronics Ltd (BEL) is in advanced talks with Thales Group, a French defence electronics firm, to set up a joint venture to make radars for both the military and civilian markets in India, a person close to the development said.
BEL also expects to source advanced radar technology from Thales, which makes the avionics in the Indian Air Force’s (IAF) Mirage 2000 fighter aircraft.
The deal is expected to be finalized in three months, the person mentioned earlier said. He did not want to be named at this stage of the talks.
Both BEL and Thales declined comment.
The proposed venture is part of BEL’s plans to expand its business and double revenue to Rs10,000 crore by 2011-12. The firm earned 86% of its annual revenue of Rs4,611 crore in 2008-09 from the defence sector. It has an order book of Rs10,100 crore.
“The (local) market for radars is growing. It is not only the demand for larger national security by the military, but also the civilian security forces,” said Deba Mohanty, senior fellow in security studies at the Observer Research Foundation. “Such kind of joint ventures should actually be the model for bridging technology gaps.”
He did not have an estimate for the radar market in India.
Earlier on Tuesday, BEL chairman V.V.R. Sastry told reporters BEL was in talks with reputed foreign and Indian players for forming joint ventures in areas such as missile electronics, guidance systems, microwave super components, electro-optics and airborne electronic warfare systems.
“We are in advanced stage of finalization with some companies for the joint ventures,” he said, but declined to give details. Sastry is set to retire on 30 April and Ashwani Kumar Datt, director of other units at BEL, will take over on 1 May.
India opened its defence sector to private investment in 2001 but has kept a ceiling on foreign investment in Indian defence companies to a maximum of 26%. Since then, the Indian defence sector has attracted foreign equity worth a mere Rs68.7 lakh, according to a note in March by the department of industrial policy and promotion, under the ministry of commerce and industry.
BEL, the sole maker of radars in the country, has to get the government’s approval before formalizing any joint venture. BEL currently makes military radars such as Rohini and 3D tactical control radars it jointly developed with the Defence Research and Development Organisation. Some radars meant for military use can be modified for civilian use for security and surveillance purposes.
Thales has an existing 26% investment in a joint venture with New Delhi-based Samtel Display Systems Ltd—Samtel Thales Avionics Pvt. Ltd—to locally produce and sell avionics systems and helmet-mounted sight display systems for IAF.
BEL has a memorandum of understanding with Astra Microwave Products Ltd, a Hyderabad-based electronic components firm, to set up a joint venture to make microwave components. Astra has a 51% stake in the new venture, which will become operational this year.
BEL also has pacts with Israel Aerospace Industries Ltd and Elisra Group of Israel to jointly develop unmanned aerial vehicles and airborne electronic warfare systems.