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Sweden’s Saab recently became the first foreign company to secure 100% Foreign Direct Investment (FDI) in India’s defense projects. This has ignited a surge of interest among various international defense manufacturers to establish independent facilities in India, allowing them full ownership without the need for partnerships.

Several contenders vying for the Indian Air Force’s Multirole Fighter Aircraft (MRFA) program are now proposing similar arrangements. Following its successful bid for 100% FDI, Saab made headlines by backing out from a previously planned joint venture with Adani Defence. The joint venture aimed to manufacture Gripen-E fighter jets in India, contingent upon winning the MRFA contract.

Dassault Aviation, the manufacturer of the renowned Rafale fighter jets, has put forth a similar proposal in the event of winning the MRFA tender. The French company envisions taking full control of Dassault Reliance Aerospace Limited (DRAL), making it a 100% Dassault Aviation Indian subsidiary with complete ownership rights.

The Eurofighter consortium, which has proposed its Eurofighter jets for the MRFA tender, is also considering a move towards 100% FDI if successful. This further amplifies the trend of foreign defense manufacturers seeking independent ownership and control over their facilities in India.

Notably, American defense giants Boeing and Lockheed Martin have adopted a different approach. Boeing aims to collaborate with Hindustan Aeronautics Limited (HAL), while Lockheed Martin is eyeing a partnership with TATA Defence Systems. In contrast, Russian offers for Mig-35 and Su-35 are set to remain associated with HAL, reflecting a traditional model of collaboration between India and Russia in the defense sector.

The Indian defense market is on the cusp of a major shift, and the decision to allow 100% FDI has ignited a fierce competition among global players. As the contenders jostle for position in the lucrative MRFA tender, India’s strategic choices will shape the future of its defense ecosystem. The ultimate winners will be those who can navigate this complex landscape and leverage the opportunities presented by the new FDI policy to build a self-reliant and technologically advanced defense sector.

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