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NEW DELHI — The Indian government has rejected a proposed joint venture between Israel’s Rafael and Mahindra Defence Systems to produce anti-torpedo systems, a move that surprised Mahindra officials and could undermine future foreign teaming efforts with private Indian companies.
Indian Defence Ministry sources said the ministry opposes such teaming projects if they involve the Indian private sector in strategic programs. Instead, the ministry supports establishing relationships for such sensitive projects only through the Defence Research and Development Organisation (DRDO).
Mahindra already has a joint venture with BAE Systems to manufacture defense land systems products.
The joint venture proposal would have given Mahindra 74 percent equity and Rafael 26 percent. It was turned down by the Foreign Investment Promotion Board (FIPB) last month, said Khutub Hai, a retired Indian Army brigadier and CEO of Mahindra Defence systems. The company is “unhappy” with the decision by the Indian government, which gave no official reason for its denial.
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