Top utility vehicles maker Mahindra & Mahindra and Telephonics, a unit of U.S.-based diversified Griffon Corp, have agreed to form a joint venture to provide surveillance and communication devices to the Indian defence sector.
The venture plans to provide radar and surveillance systems, identification devices and communication systems to India's defence ministry and the civil sector, the companies said in a joint statement on Thursday.
India plans to spend $50 billion over the next five years to upgrade its military, which largely consists of Soviet-era gear, to counter the rising might of China and threats from Pakistan, making the market very lucrative for global defence equipment makers.
Mahindra and Telephonics also plan to set up a plant in India to manufacture and service airborne radar systems that are supplied to state-run military aircraft maker Hindustan Aeronautics Ltd and to support airborne maritime surveillance systems for the Indian Navy and Coast Guard.
The two firms have sought India's Foreign Investment Promotion Board's approval for the planned foreign direct investments (FDI)in the venture, the statement said.
The size of the proposed FDI was not disclosed.
"By partnering with Telephonics, Mahindra will become a 3-dimensional force providing products for Land, Maritime and Air platforms," Anand Mahindra, Vice Chairman of the Mahindra Group, said in a statement.
India has recently opened commercial bids for a $11 billion contract to buy fighter jets for its Air Force, moving closer to awarding one of the world's biggest arms contracts to one of two short-listed European groups.
Eurofighter, which makes the Typhoon fighter jet and is a four-nation consortium of EADS, representing Germany and Spain, Britain's BAE Systems and Italy's Finmeccanica and France's Dassault, which makes the Rafale plane, are the two short-listed firms.
Telephonics already has a presence in India and it supplies radar systems for helicopters and also supplies Boeing multi-mode radars for India's Maritime Surveillance aircraft.
The venture plans to license technology from Telephonics for use on a range of products that have both defence and civil applications, the companies said.
(Reporting by Anurag Kotoky; editing by Malini Menon)