BAE Says India May Buy 57 More Hawk Trainer Jets

By Rumman Ahmed and Nitin Luthra

BANGALORE -(Dow Jones)- U.K. defense contractor BAE Systems PLC (BAESY) said Wednesday the Indian government may order 57 more Hawk trainer jets for its navy and air force. India's state-run Hindustan Aeronautics Ltd. is in talks with the federal government to study the possibility of placing a follow-on order with BAE for the aircraft, Julian Scopes, president of BAE Systems India, told Dow Jones Newswires in an interview. "Negotiations have started on a follow-on buying of the Hawk, which will be for 57 aircraft of which 17 will be for the Indian Navy and the remainder for the Indian Air Force," Scopes said on the sidelines of the Aero India show.

India had ordered 66 Hawk jets in 2004 for $1.45 billion for its air force. The country wants to buy more Hawk trainers to better train its pilots for flying supersonic combat jets such as the Sukhoi-30MKI and Jaguar. As per the 2004 contract, 24 aircraft were ordered in flyaway condition, of which 23 have been delivered by BAE, Scopes said. The remaining aircraft will be produced by Hindustan Aeronautics under license from BAE. Earlier in the day, a senior Indian defense ministry official said the federal government is likely to order up to 100 Hawk jets for the air force and navy.

"There was always a plan for about 160 Hawks, so we are looking to fulfill that," the official, who asked not to be named, said. "The new order could be announced soon, perhaps at Aero India too."

Scopes said BAE is also in discussions with Indian companies to form partnerships for meeting potential demand for its homeland security and naval products. The company is considering jointly producing its radar, body armor, command and control systems and also naval security equipment in India, he added. Scopes sought an increase in India's foreign direct investment, or FDI, limit for joint ventures in the defense sector from the current 26%.

"To build a business in India, we and others will argue that the government needs to lift the cap on FDI from 26% initially to 49% and then completely." He said a joint venture with Mahindra & Mahindra Ltd. (500520.BY), India's biggest sport-utility vehicle maker by sales, to produce land-based defense equipment will start operations in the second quarter of this year. Mahindra will hold the majority 74% stake in the venture as per the Indian norms.

"The joint venture will initially focus on existing M&M businesses," Scopes said. BAE is also considering expanding its partnership with Wipro Ltd. (WIP), India's third-biggest software exporter by sales, Scopes said. BAE and Wipro had announced in November 2007 that they would jointly work on commercial aerospace projects. Scopes also said the Indian government may call bids for the supply of an additional 1,000 towed howitzers. BAE has already bid for supplying 400 towed howitzers to India.

"The bids for these (400) howitzers are currently under technical evaluation and the company expects to be called for trials sometime in 2009," he said. BAE is also in talks with India's defense ministry for supplying ultra-light weight howitzers, he added.

santanu.choudhury@dowjones.com

Posted in: India,Training aircraft