Post FDI policy change, Tatra set to partner with Reliance Defence for making military trucks

NEW DELHI: In the first major defence joint venture after the big-bang changes in the FDI policy, Czech major Tatra is set to partner with Reliance Defence to manufacture military trucks for Indian as well as global requirements.

The 51:49 partnership JV, which will have Reliance with the majority stake, is also expected to get several Tatra trucks already in service with the army and the nuclear forces back on the road after spares and servicing were hit due to a scandal in 2012.

Follow @ETDefence Twitter handle for comprehensive coverage on other buzzing Defence stories

ET has learnt that the defence ministry received a letter on the impending JV two weeks ago, informing that the two companies are planning to partner for maintenance and overhaul facilities, upgrades as well as manufacturing units for the trucks in India and have signed a Memorandum of Understanding (MoU).

Sources told ET that the JV is targetting an annual market of Rs 3500 cr given the new and the service needs of the armed forces. A new production unit for the trucks is also planned at the Dhirubhai Ambani Defence Park as part of the ‘Make in India’ initiative. When contacted, a Reliance Defence spokesperson confirmed that the company is in advanced stage of discussions with Tatra for collaboration to serve the Indian market as well as exports to other nations.

While the process of registering the company and obtaining manufacturing licences is pending, this would be the first major joint venture since FDI norms were relaxed in November, making it much easier for foreign investors to venture into the defence manufacturing with a 49% limit under a new automatic process.

Industry analysts say the new norms have resulted in a flurry of activities and interest in JVs between foreign defence manufacturers and Indian entities. A further boost would come if the defence ministry places tenders and orders for military systems from the private sector.

“In addition to the relaxation of Defence FDI norms, the OEMs and their Indian partners are looking to the MoD to help them create viable business cases. The MoD should and can play a significant role in this aspect as well,” says Ankur Gupta of EY.

At present, Tatra trucks are in service with the Army and strategic forces for several critical military systems including the Brahmos missile complex.