Joint Venture Between Rafael, BEL Now On Track

Aerospace Daily & Defense Report
March 30, 2010

NEW DELHI —Israel’s Rafael Advanced Defense Systems is close to accepting a 26% equity stake in a joint venture with India’s public sector company, Bharat Electronics Ltd., giving speed to the overdue project.
The venture is to develop advanced imaging infrared seekers for the Python 5 fifth-generation air-to-air missile.India has ordered 18 Spyder systems that use advanced air-to-air missiles as ground-launched surface-to-air missiles. Besides the Python 5, it has the beyond-visual-range Derby missile, which has an active seeker.
BEL says it hopes the joint venture will be sealed within four months. The venture will encourage development of indigenous missile and guidance technologies within India and will enable Rafael to meet offset requirements by transferring technologies and workshare.
India restricts foreign equity in defense projects to 26%. This has been a bone of contention among foreign companies that say they are constrained to transfer technology as they have no board representation and can exert little influence when they hold just a quarter of the venture’s stock.
Rafael and other foreign suppliers want to be able to invest up to 49 percent. However, Rafael Chairman Ilan Biran acknowledges that the lure of India’s defense jobs is enough to overcome his basic objections to the government’s foreign investment restrictions.
The ultimate solution is forming joint ventures, he told Aviation Week in an exclusive interview.
“They [Rafael] have come close to agreeing more or less on the 26% stake,” BEL Chairman & Managing Director Ashwani Kumar Datt said.“[The joint venture] is moving in the sense that we are reworking our plans [now that] the transfer of technology will be different.”
Rafael’s interest in roping in a third private partner has been rejected by BEL. “We have made it clear that we are not in a position to get a third partner,” Datt said.
The Python-5 missile provides the user with a full sphere launch capability.
It can be launched from a very short range to beyond visual range, and also is offered in an air defense configuration.
- Neelam Mathews