2 min read.Updated: 28 Sep 2015, 08:49 PM ISTP.R. Sanjai
The two firms have agreed to jointly explore opportunity for manufacturing and building capabilities in defence vehicles, aviation and associated areas
Mumbai: Anil Ambani-controlled Reliance Defence Ltd, established as a unit of Reliance Infrastructure Ltd, on Monday signed a memorandum of understanding (MoU) with Emirates Defence Industries Co. (EDIC), a defence company in the United Arab Emirates (UAE).
Reliance Defence and EDIC have agreed to jointly explore the opportunity for manufacturing and building capabilities in defence vehicles, aviation and associated areas, defence equipment and armament manufacturing, defence electronics, commercial and naval ships, maintenance, repair and overhaul of military equipment and platforms.
Reliance Defence has 11 subsidiaries in niche segments of the defence sector. This is the fourth such tie-up by the Reliance Group, which is trying to tap opportunities in the Indian defence space.
“The partnership will explore the opportunity in the UAE defence industry which has many capital expenditures but the costs for setting up facilities, recruiting and developing scientists and engineers are high. The partnership will aim at bringing synergy to bring down operational costs and leverage each others’ capabilities," the company said in a statement.
In the defence and aerospace segment, Reliance Defence is pursuing partnerships with leading international original equipment manufacturers (OEMs) to acquire equity stake in existing companies within the country as also globally to meet homegrown solutions for the defence sector, the statement said.
EDIC is an integrated national defence services and manufacturing platform from the UAE.
Early this month, Reliance Defence had agreed to work with Abu Dhabi Ship Building to construct warships such as frigates and destroyers over the next 10 years for the Persian Gulf nations.
The companies are forming a joint venture to build and repair warships, and also commercial vessels, in the region.
Reliance Group is in the process of acquiring shipmaker Pipavav Defence and Offshore Engineering Co. Ltd. On 22 July, the Reliance Group company had acquired a minority stake in the company and is now in the process of buying a majority stake through an open offer. Russia’s JSC Ship Repairing Centre Zvyozdochka had also agreed to jointly refit and certify submarines of the 877EKM category at an estimated ₹ 11,000 crore.
India will see a defence budget allocation of $620 billion between fiscal 2014 and fiscal 2022, of which 50% will be capital expenditure, according to a February report released by industry group Federation of Indian Chambers of Commerce and Industry and financial services firm Centrum Capital Ltd.
The annual opportunity for Indian firms—both state-owned and private—is expected to be $41 billion by fiscal 2022 and $168 billion cumulatively, the report said.
In June, Reliance Group had applied to the department of industrial policy and promotion (DIPP), the nodal agency for foreign direct investment, for licences to make defence and aerospace products.
Group companies that applied for licences are Reliance SED Ltd, Reliance Naval Systems Ltd, Reliance Unmanned Systems Ltd and Reliance Aerostructure Ltd, according to the DIPP website.
These firms want licences to manufacture, among other things, scientific investigation ships, parts and accessories of aircraft and spacecraft, engines, turbines and radar equipment.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.
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