European defence major Airbus Group today cautioned that 49 per cent FDI limit in defence sector cannot fetch India the industry or the right original equipment manufacturer that it is eying under ‘Make in India’ initiative.
The firm, which is in negotiations with India for several defence projects worth billions of dollars, also made it clear that they would be able to invest in the domestic defence sector only if they get contracts as it takes “two to tango”.
The group also admitted that the nearly USD 1.4 billion project of the Indian government to acquire six Airbus mid-air refuellers has “stagnated” even as it offered to transfer the final assembly line of Panther helicopters if it gets an order from the Navy for the same.
“..forget about 49 per cent. It is not going to get an industry and it is not going to get OEMs (original equipment manufacturer) of quality. You may get a few but not the right ones,” Pierre de Bausset, President and Managing Director of Airbus Group India, said.
Pitching for “fair business”, he said that in the beginning, their Indian partners will need them a lot before they become the real champions that India has in mind.
“And when they need us a lot in the beginning, I want fair business. Fair business means that we need to have levels of controls that are appropriate for the risks that we are taking.
“So setting the limit at 49 per cent or whatever amount is not… you have to think in terms of how do you attract us, how do you attract talent, how do you make it a good win-win partnership and not a very straight-jacket in the beginning,” he said addressing reporters here ahead of the Defence Expo later this month.
He said that if an OEM is bringing in investment or if they are bringing a product which is part of their own product line world wide, “you do understand that we want to have some control over it”.
He added that 49 per cent is not a “good limit” and that it is “at odds” with the policy that has been stated by the government “recently”.
“But we are faced with a moving environment,” he said.
He mentioned about his company’s focus on Make in India and said if the contracts come in, they can make investment as high as Rs 5,000 crore in India.
He spoke about the industrial development works undertaken by the firm in other countries.
“We are ready to do the same but it take two to tango. We need the government to actually give is contract,” he said.
