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Business News/ Companies / Reliance Defence, Israel’s Rafael to set up missile, air defence JV

Reliance Defence, Israel’s Rafael to set up missile, air defence JV

Reliance Defence to own 51% of project whose initial capital outlay is Rs1,300 crore, excluding the cost of technology

An agreement towards the JV was signed at Defexpo India 2016 between Reliance Defence officials, headed by Anil Ambani, and Rafael Advanced Defence executives. Photo: AFPPremium
An agreement towards the JV was signed at Defexpo India 2016 between Reliance Defence officials, headed by Anil Ambani, and Rafael Advanced Defence executives. Photo: AFP

Goa: Reliance Defence Ltd, a unit of Reliance Infrastructure Ltd (R-Infra), and Israel’s Rafael Advanced Defence Systems Ltd have agreed to set up a joint venture (JV) in the specialized areas of air-to-air missiles, air defence systems and large aerostats.

The project will have an initial capital outlay of more than 1,300 crore, excluding the cost of technology.

Based on current requirement, the JV will address multiple programmes in India valued at more than 65,000 crore over the next 10 years. It is one of the biggest between an Indian firm with any original equipment manufacturer, according to Rajesh Dhingra, chief executive officer, Reliance Defence.

An agreement towards this was signed at DefExpo India 2016 between Reliance Defence officials, headed by group chairman Anil Ambani, and Rafael Advanced Defence executives.

The strategic tie-up with Rafael Advanced Defence Systems, a world leader in defence technologies, will mark the entry of Reliance Defence in the complex field of air-to-air and air defence systems manufacturing in India.

Reliance Defence will own 51% in the joint venture and the rest will be held by Rafael.

The JV firm will be located at the Dhirubhai Ambani Land Systems Park, Pithampur in Indore, Madhya Pradesh, and will generate more than 3,000 jobs.

Rafael is a market leader in the air-to-air missile segment and has world-renowned products such as Python and Derby.

For air defence systems, Rafael’s portfolio includes Spyder short range and medium range, and Barak missiles family of surface-to-air missiles in the short and medium range.

Rafael has already provided large aerostat systems to the Indian Air Force for surveillance, reconnaissance, communication and intelligence needs.

The two firms, through the JV, will offer the entire range of products in these fields to the armed forces.

On 4 November, the Reliance Infrastructure board said new high-growth opportunities in defence, arising from the Make in India and Skill India policies, serve vital national priorities and have several attractive features.

The board said these include relatively low capital intensity, a lower gestation period, minimal regulatory uncertainties, higher job creation and the potential for better return on equity.

On Tuesday, while addressing a seminar, Anil Ambani said the concept of strategic partners is a great advance. “A credible defence policy cannot be built without the involvement of the private sector as a strategic partner. While I salute the spirit behind the policy, we look forward to more clarity in implementation. Our policies have to be in line with global best practices. Sub-optimal division or groupings will make the industry inefficient. For instance, the division of shipbuilding into above the water and below the water categories," Ambani said.

From France to Germany to the UK, few global leaders follow such a regime because it makes investments unviable, he said.

“In general, we must consider competition without any intra or inter segment curbs between air, land and navy in the 10 programmes that have been identified for strategic partnerships.

“An open and calibrated policy will shake the status quo, end the monopoly of existing players, and benefit the nation by encouraging the entry of new players and increased competition," Ambani added.

Reliance Group firms 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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Published: 29 Mar 2016, 03:51 PM IST
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