Lockheed Martin today signed an agreement with Tata Advanced Systems to manufacture F-16 fighter planes in India, as part of a plan to shift its Fort Worth, Texas plant to India in return for defence orders from India worth billions of dollars.
With the US Air Force phasing out the F16s, Lokheed Martin needs a sustainable ecosystem to continue production of the fighter planes and India, which is still dependent on foreign supplies for most of its defence equipment, needs a firm supplier.
For Tata Advanced Systems, a deal with Lokheed Martin to produce the F16s would be a game changer as it will elevate the company from a aircraft parts supplier to a full-fledged manufacturer.
The Indian Air Force needs hundreds of aircraft to replace its Soviet-era fleet, but under the Modi government's defence procurement policy, foreign suppliers need a local industrial base to manufacture planes in India and to help build domestic capabilities.
Since Modi's 'Make-in-India' runs counter to US President Donald Trump's 'America First' policy, the only option for India is to go for second-grade technology and defence equipment rather than produce state-of-art equipment locally.
Modi wants the world to produce in India while Trump wants companies to invest in India to create jobs there.
Lokheed Martin's announcement, which comes ahead of Prime Minister Narendra Modi's US visit is also intended to influence India's defence procurement contract for fighter jets.
India, which recently deferred purchase of 125 medium role fighter jets, restricting itself to 35 French-made Rafale fighters, is expected to acquire more fighter planes in the near future.
While announcing their agreement at the Paris Airshow, Lockheed Martin and Tata said moving the production base to India would not affect jobs in the United States.
"F-16 production in India supports thousands of Lockheed Martin and F-16 supplier jobs in the US, creates new manufacturing jobs in India, and positions Indian industry at the center of the most extensive fighter aircraft supply ecosystem in the world," a joint statement by the two companies said.
The companies also plan to export the aircraft to other countries as the F-16s are flown by air forces around the world, the joint statement said adding that some 3,200 of these planes are in operation in 26 countries and the model that is being offered to India will be Block 70, the most modern of all the F-16s.
"This unprecedented F-16 production partnership between the world's largest defence contractor and India's premier industrial house provides India the opportunity to produce, operate and export F-16 Block 70 aircraft, the newest and most advanced version of the world's most successful, combat-proven multi-role fighter," the statement said.
Tata is already building airframe components for the C-130 military transport aircraft.
India has not opened formal bidding for the jet order, which is expected to be anything from 100 planes to 250.
A number of companies, including Sweden`s Saab, which manufactures the Gripen fighter, have pitted their planes as a modern alternative to the F-16s.