Feb. 12 (Bloomberg) -- BAE Systems Plc, Europe’s biggest defense company, is in talks with Indian shipbuilders as it seeks to win contracts for surveillance vessels as the country beefs up coastal security after terror attacks in Mumbai.
BAE has held discussions with India’s state-owned shipyards and private builders to explore opportunities, said Julian Scopes, president of the London-based company’s Indian unit, in an interview. BAE can offer designs and technologies, or build warships with partners, Scopes said in Bangalore yesterday.
India’s government has pledged to boost surveillance at sea after terrorists infiltrated the financial capital in boats in November and killed 164 people. BAE’s push to win naval work comes as India seeks to reduce its reliance on Russia as its main military supplier.
“The Indians would like to broaden out their supply base,” said Steven Zaloga, a senior analyst at Teal Group, a Fairfax, Virginia-based consultant. “India has a fairly active domestic shipbuilding program, but when they have bought overseas, they tend to buy from the Russians.”
At least 10 terrorists arrived in Mumbai on an inflatable dinghy after hijacking an Indian fishing boat off the west coast and killing its crew, Home Minister Palaniappan Chidambaram said. They attacked the main railway station, two five-star hotels, a Jewish center and a hospital with automatic rifles, grenades and explosives.
Vulnerability
The attacks highlighted the vulnerability of India’s coastline, and the government will create a coastal command for overall supervision of maritime and coastal security, Chidambaram told parliament Dec. 11.
“They can take one of our designs and build them in India or we may have a joint design center,” Scopes said. “It’s for building ships more efficiently and effectively and cheaper.”
Separately, India and Russia haven’t agreed on conditions over the sale of the Russian aircraft carrier Gorshkov due to differences regarding costs. The Indian Navy agreed to buy the Gorshkov for $1.5 billion five years ago.
Under the terms of the agreement, Russia was to overhaul the 44,500-metric ton carrier and supply 28 MiG-29K fighter jets and other components. It subsequently raised the asking price by $1.2 billion, saying refit costs had increased.
“They had a certain amount of difficulty with the Russians and I am sure that is why BAE is speaking with them,” Zaloga added.
Russia has been India’s principal supplier of fighter planes and equipment in the past. Lockheed Martin Corp. and Boeing Co., the largest U.S. military contractors, made their first military sales to India only within the past 12 months.
Armored Vehicle
Scopes said BAE plans to make its joint venture with Mahindra & Mahindra Ltd., India’s biggest sport-utility vehicle maker, a base for exporting armored vehicles in Asia.
BAE will hold 26 percent of the venture and Mumbai-based Mahindra & Mahindra will own 74 percent. The partnership will build a version of BAE’s RG-31 mine-protected vehicle in India.
The RG-31 is an all-steel, welded-armor vehicle designed to protect occupants from explosions by antitank mines. The joint venture will have headquarters in New Delhi with an initial workforce of 50 to 60 people, and operations are scheduled to start in the second quarter of 2009, BAE said.
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