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49% FDI ceiling in defence not attractive: Airbus

15 March 2016

European aircraft manufacturer Airbus Group today cautioned that the 49 per cent foreign direct investment limit in the defence sector cannot fetch India the industry or the right original equipment manufacturer that it is eying under its 'Make in India' initiative.

The European aerospace giant, 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 $1.4 billion project of the Indian government to acquire six Airbus mid-air refuelling planes 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 manufacturers) 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 strait-jacket in the beginning,'' he said addressing reporters in New Delhi 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 worldwide, ''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 Rs5,000 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 takes two to tango. We need the government to actually give us a contract,'' he said.


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