India’s top utility vehicles maker, Mahindra and Mahindra Ltd, and Telephonics Corp., a unit of US-based diversified Griffon Corp., have agreed to form a joint venture (JV) to provide surveillance and communication devices to the Indian defence sector.

Joining hands: Mahindra Group vice-chairman Anand Mahindra. By Saanskrut Kumar/Mint

India plans to spend $50 billion (around 2.5 trillion) over the next five years to upgrade its military, which largely consists of Soviet-era gear, to counter the rising might of China and threats from Pakistan, making the market very lucrative for global defence equipment makers.

Mahindra and Telephonics also plan to set up a plant in India to manufacture and service airborne radar systems that are supplied to state-run military aircraft maker Hindustan Aeronautics Ltd and to support airborne maritime surveillance systems for the Indian Navy and Coast Guard.

The two firms have sought approval from the country’s Foreign Investment Promotion Board’s for the planned foreign direct investment (FDI) in the venture, the statement said.

The size of the proposed FDI was not disclosed.

“By partnering with Telephonics, Mahindra will become a three-dimensional force providing products for land, maritime and air platforms," Anand Mahindra, vice-chairman of the Mahindra Group, said in a statement.

India has recently opened commercial bids for a $11 billion contract to buy fighter jets for its air force, moving closer to awarding one of the world’s biggest arms contracts to one of two shortlisted European groups.

Eurofighter, which makes the Typhoon fighter jet and is a four-nation consortium of EADS NV, representing Germany and Spain, Britain’s BAE Systems Plc and Italy’s Finmeccanica SpA and France’s Dassault Systemes SA, which makes the Rafale plane, are the two shortlisted firms.

Telephonics already has a presence in India and it supplies radar systems for helicopters and also supplies Boeing Co. multi-mode radars for India’s maritime surveillance aircraft.

The venture plans to license technology from Telephonics for use on a range of products that have both defence and civil applications, the companies said.

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