New Delhi, Sept. 23: Mahindra & Mahindra (M&M) plans to form a joint venture with BAE Systems to make anti-landmine vehicles.
A few months back, M&M had sought the Foreign Investment Promotion Boards (FIPB) approval for the joint venture.
The Mahindras propose to hold a 51 per cent stake in the joint entity, while the British company will own the rest.
Our application is pending with the FIPB. It is some time ago that we filed it, said an M&M official.
BAE Systems is a global defence and aerospace company with 97,500 employees worldwide. Its sales exceeded £15.7 billion ($31.4 billion) in 2007.
Earlier this year, M&M signed a memorandum of understanding with BAE to manufacture the anti-landmine vehicles.
A top M&M official told The Telegraph that the Indian automobile industry derives a lot of technological know-how from the defence and aerospace segment. Therefore, any deal in this segment is only too logical.
While current norms allow up to 26 per cent foreign direct investment in defence, Union minister of defence A.K. Antony had recently said the government could raise this limit to 49 per cent on a selective basis.
However, it is not clear whether the joint ventures mine-proof vehicles will fall under the defence or the automobile sector. The countrys foreign direct investment rules classify the manufacture of arms and ammunition as defence production.
Sources say the two companies are in talks about the production of BAEs RG-31 landmine-protected vehicles that are used in the US, Canada and by the United Nations.
The British defence group has supplied 165 armoured vehicles, called Casspir, to the Indian Army since 1999.
M&M is a world-class company with skills to become a strong partner of BAE to develop mine-protected vehicles, said Mike Mendoza, managing director of BAEs Indian operations.