India rejects M&M's proposal for defence JV with Rafael

The government has rejected a proposal by auto major Mahindra & Mahindra to set up a joint venture with Israel's Rafael Advanced Defense Systems Ltd, a government statement said today.

Mahindra & Mahindra Ltd, one of India's leading manufatures of SUVs and tractors, and Rafael Advanced Defense Systems Ltd, a manufacturer of high tech defence systems were to invest about Rs100 crore in a joint venture company in India to develop and manufacture naval systems.

The JV was proposed to develop and manufacture anti torpedo defence systems, electronic warfare systems, advanced armouring solutions and remotely operated weapon stations for futuristic infantry combat vehicles (FICV).

The Foreign Investment Promotion Board (FIPB) of the finance ministry rejected the proposal for creation of a 74:26 joint venture company even as it approved 12 FDI proposals worth Rs800 crore.

M&M and Rafael had in March this year agreed to form a joint venture in India to develop and manufacture products such as Anti Torpedo Defence Systems.

Rafael was expected to make investments in Mahindra's existing naval systems division in Pune, which would also have been the location of a production facility.