Friday, February 15, 2008

Tatas, Boeing to float joint venture for aerospace parts in India

The Tata group and the US aircraft major Boeing are forming a joint venture company for making defence-related aerospace components in India.

The components are for exports to Boeing and its international customers. The joint venture hopes to export components worth $500 million initially.

Under the memorandum of agreement signed by Boeing and the Tata group, it is contemplated that the joint venture company will be established by June, a press release issued today said. A research and development centre for advanced manufacturing technologies is also contemplated, said a statement issued by Tatas.

“This joint venture between Tata and Boeing is an important part of our strategy to build capabilities in defence and aerospace,” said the statement quoting Mr Ratan Tata, Chairman of the Tata Group, in the statement. “I look forward to the joint venture becoming a world-class facility in India.”

The joint venture will bring “real and lasting value to India’s aerospace industry, while making Boeing products more globally competitive,” said Mr Jim Albaugh, President and CEO of Boeing Integrated Defence Systems.
Investment details

When asked about investment details, a Boeing spokesperson said, “this is still under negotiation”. But the sources close to Tatas said that the Indian business conglomerate would hold the majority stake in the joint venture. The Tata Group and Boeing signed the memorandum of agreement in December last year.

Boeing, in December, had signed a 10-year memorandum of understanding with state-owned Hindustan Aeronautics Ltd (HAL) also to source sub-systems for fighter aircraft and helicopters.

“The initial intention of the joint venture is making aerospace components for Boeing and its international customers. Production for the domestic market is not in the plan,” Mr Brian Nelson, Global Director of Communication, Boeing Integrated Defence, told Business Line.

The joint venture will utilise the existing manufacturing capability of Tatas and “develop new supply sources throughout the Indian manufacturing and engineering communities for both commercial and defence applications,” the statement said. However, about manufacturing locations, Mr Nelson said there was no decision yet.

The manufacturing capabilities established within the joint-venture company would in later phases be leveraged across multiple Boeing programmes, including the Medium Multi-Role Combat Aircraft (MMRCA) competition.

In the first phase of the agreement, Boeing would potentially issue contracts for work packages to the joint venture company involving defence-related component manufacturing on Boeing’s F/A-18 Super Hornet for the US Navy and Royal Australian Air Force, CH-47 Chinook and/or P-8 Maritime Patrol Aircraft, the statement said.

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