NEW DELHI — BAE Systems UK has teamed up with India's Mahindra Group to produce 145 light howitzer guns being bought by the Indian Army on a government-to-government basis.
In 2015, the Indian government cleared a pending proposal to buy 145 of the M777A2 LW155 howitzers from the US subsidiary of BAE Systems for $700 million, but only after BAE committed to set up assembly, integration and test (AIT) facilities in India to boost domestic industry.
Though the proposal to buy the 145 howitzers has been pending since 2008, the government agreed to give the go-ahead to produce the guns in the Make in India category.
"BAE Systems looks forward to working with Mahindra in the coming weeks to finalize details of this AIT facility and to negotiate the terms of its contractual arrangement," a company press release said Wednesday.
Mahindra Group was competing along with other domestic defense companies to tie up with BAE Systems to set up AIT facilities.
The other competitors included India's state-owned Ordnance Factory Board and private sector companies Larsen & Toubro, Tata Power (Strategic Engineering Division), Punj Lloyd and the Kalyani Group.
The BAE press release says," The selection (of Mahindra) follows a detailed assessment of Mahindra's ability to fulfill the requirements and provide the best value to the M777 India program, and in the future, grow its capability as a strategic partner for BAE Systems in India."
An executive of the Mahindra Group said the AIT facility will be set up in the national capital region, and that it will be ready within 18 months, but gave no details on the business side of the joint venture.
BAE Systems and Mahindra Group had set up a joint venture in 2010, but in 2013 BAE sold off 26 percent of its holding in the venture named Mahindra Defence Land Systems India.