Offset clause spawns pacts for local players

The offset policy of the Union government has almost made it imperative for the international firms seeking to supply defence equipment to the Indian defence forces to search for local partners.

Apparently, this has turned out to be a bonanza for the domestic companies in the aerospace and defence space.

Within the two days of Aero India 2007, at least a dozen of such partnerships have been announced, while many more are in the pipeline. However, most of these partnerships do not have any real focus.

Both the global suppliers and the Indian firms say that this is being done with future in mind.

Indian aerospace and defence companies such as HAL, BEL, L&T Dynamatic Technologies and designing services providers like QuEST, CADES and Infotech are involved in the offset generated agreements.

Udayant Malhoutra, CEO and MD of Dynamatic Technologies, which announced an MoU with Northrop Gruman Corporation on Thursday, said: "Given the growing requirements of the Indian defence forces, we are delighted to be working with Northrop to identify and pursue opportunities to serve India's defence needs."

Boeing, which is planning to sell F/A-18 Super Hornet to the Indian Air Force's multi-role combat aircraft (MRCA) programme, has signed an MoU with L&T. The MoU, according to both the companies, aims at joint exploration of business opportunities.

HAL has also announced an MoU with European Aeronautics Defence and Space Company (EADS). The MoU does not have any immediate objective but aims at further developing long-term cooperation and define joint strategies.

Analysts feel that as most of the foreign suppliers are yet to get a breakthrough in the Indian defence market, they are cautiously exploring opportunities by entering pact, without committing any immediate investment.

QuEST, an engineering services provider, has already announced a JV company with of one its clients, Canadian Magellan Aerospace. Infotech Enterprises, a Hyderabad-based engineering services provider, is busy in expanding its capacity. The company, which has already made four acquisitions, is eying a company in North America or in Europe. "We are planning to go for an acquisition in North America or Europe, since our customers are largely concentrated in these places," said Krishna Bodanapu, vice president, Infotech Enterprises.