A Saab Gripen fighter jet performs an aerial display at the Aero India air show at Air Force Station Yelahanka in Bengaluru, India. (Photographer: Dhiraj Singh/Bloomberg)

Sweden’s Saab Wants FDI Rules Tweaked In $20-Billion Fighter Jet Bid

Saab AB wants India to tweak the ongoing bidding programme for medium multi-role combat aircraft to allow majority control for foreign manufacturers as the Swedish maker of fighter jets vies for a $20-billion order.

“We want majority control in the Indian joint venture that would be building the jets since the we will be responsible for the quality and reliability of the aircraft,” Ola Regnill, managing director at Saab India, told BloombergQuint on the sidelines of the 12th Aero India show. The company has partnered with the Adani Group to bid for the aircraft order.

The strategic partnership programme requires the Indian partner to have majority control with the stake of foreign defence companies capped at 49 percent. Prime Minister Narendra Modi aimed to cut defence imports by India, the world’s largest buyer of arms and ammunition, by boosting local manufacturing. So far, his make in India initiative hasn’t yielded results.

“We want significant control initially and are willing to gradually bring down our stake over a period in favour of the Indian partner,” Regnill said.

Defence Minister Nirmala Sitharaman, speaking at the inauguration of Aero India, said India will allow 100 percent foreign direct investment in defence. She didn’t give details. India allows full control to foreign partners on a case-by-case basis in niche technologies.

India floated a request for information in April last year for 114 fighter jets to be majorly made in India under the Strategic Partnership Programme. The government will evaluate and select a private sector Indian player as the strategic partner along with independently evaluated overseas company—called original equipment maker—for the aircraft. It plans to acquire 18 aircraft in a fly-away condition and the remaining 96 to be built in India.

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Nearly 75 percent of aircraft will be single-seater and the rest twin-seaters, according to the request documents.

The bids are under evaluation and the Defence Ministry's nod will be sought before the Air Force floats the request for proposal.

But the proposal is likely to get delayed because of the elections, said Regnill.

There are seven bidders for the $20 billion order including Saab with its Gripen-E which is under flight testing in Sweden. The company is willing to transfer the technology along with intellectual property for India-specific innovation to the Indian arm, said Regnill.

It’s competing with Lockheed Martin’s F16—the U.S. aircraft maker is now offering F21, a completely new fighter jet designed for India—Russian MIG-35 and Sukhoi-35, Boeing’s F/A-18, Airbus’ Eurofighter and Dassault Aviation’s Rafale.

India has 31 squadrons of fighter jets against the authorised requirement of 42. While the Air Force has committed to induct 12 squadron of light combat aircraft Tejas, it requires fourth-generation medium multi-role fighters to augment its strike capability. The Tejas is expected to replace the ageing MIGs squadrons in the years to come.

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