AgustaWestland hopes to exceed FDI cap

AgustaWestland hopes to exceed FDI cap

New Delhi: Anglo-Italian helicopter firm AgustaWestland will seek government approval for a 49% stake in a joint venture with Tata Sons to set up a final assembly unit for AW-119 choppers in Hyderabad, its second such facility after Philadelphia in the US.

The joint venture was announced Tuesday by AgustaWestland chief executive Giuseppe Orsi and Tata Sons chairman Ratan Tata at the land and naval systems exhibition, DefExpo 2010, in New Delhi.

Government approvals have not come easily for such joint ventures in the past.

A bid by UK’s BAE Systems Plc to increase its stake beyond 26% in its joint venture, Defence Land Systems India, with Mahindra and Mahindra Ltd, was blocked by the Indian government.

Similar moves by Larsen and Toubro Ltd to create a joint venture with the Netherlands-based EADS NV was blocked on the grounds that it may exceed the 26% cap on foreign holding in Indian defence firms.

AgustaWestland is bullish it will be able to secure government nod for a 49% stake in the venture as the foreign holdings law has a clause permitting up to 49% stake. “The joint venture was negotiated over quite a lengthy period of time," said Graham Cole, managing director, AgustaWestland. The firm makes helicopters for civil and military users from its facilities in Italy, the UK and the US.

Cole said the Hyderabad facility would be able to deliver 30 helicopters annually. “We are hoping to be in a position where the first aircraft can come off the line in end 2011," he said, adding that the firm will begin with assembling AW-119 helicopters and may later extend the facility for other models as well.

“The exact site we haven’t decided yet. We want to reserve an area for a possible extension of our facility if this will be an eventual requirement," Cole said.

AgustaWestland chose Hyderabad because of its proximity to special economic zones, availability of skilled personnel, presence of Tata group firms, and as “the airport is easily connected with Europe".

The helicopters assembled at this facility will be sold in the international market barring North America.

The company is also likely to benefit if it can secure an Indian Army contract for 197 choppers to replace older helicopters.

AgustaWestland has been cleared to secure orders for about a dozen AW-101 helicopters for the President, Prime Minister and visiting heads of state by the Cabinet Committee on Security. Cole said the final agreement with the government is likely to be signed soon.

The setting up of the new assembly line, he said, was irrespective of winning a future order and the two were not co-related.

“I think there is a encouragement that India is now at a level of maturity in defence procurement," he said. “If you want to advance in that market then stop looking at it on a project basis and come and look at India as a place to be, to stay to invest to do business with."