EADS Enters into Agreement with Wipro to Get Ready for Fighter Production

by: Matthew Potter
June 21, 2011

Category: Boeing, Business Line, Companies, Contract Additions, Contract Awards, Countries, D'Assault, EADS, Events, France, India, Lockheed Martin, MiG, Military Aviation, production program, Proposal, SAAB | RSS 2.0

As India moves forward with its contest for a new fighter to be made by a Western producer the potential suppliers are angling to get ready for the contract to start. The contest started over two years ago for the advanced aircraft and bids were received from six different suppliers. These included the American companies Boeing (BA) and Lockheed Martin (LMT), Russia’s MiG, Sweden’s SAAB, the multi-national consortium Eurofighter and France’s Dassault.

Recently as part of the contract evaluation process the Indian selection authorities made a decision to eliminate all of the aircraft but the two from Western Europe.

As part of this contract as with most Indian defense deals there are significant offset requirements that must be met. Actually to spur bids from Western companies who previously had found it hard to participate in contests the Government reduced their requirements from traditionally very high ones. Offsets require the winner to spend some percentage of the total contract value in the awarding country. Often it can be by buying parts, or paying for assembly work, or in some other business line as long as it meets the total requirement. Boeing (BA) has begun to do this as part of their contract for six P-8I maritime patrol aircraft.

Even though no winner has yet to be announced for the Medium Multi-Role Combat Aircraft (MMRCA) contract companies like EADS (EADS:P) who are part of the Eurofighter consortium that makes the Typhoon fighter have begun to position themselves if they do win. The company has announced a deal with Indian consortium Wipro to provide components to its subsidiary CESA.

Even if Eurofighter does not win the MMRCA contract this agreement will support EADS production of other aircraft and aerospace components if they want to use it. As with all of the large aviation contractors EADS is looking for expansion into Asia to be nearer emerging markets as well as perhaps to gain benefits of labor costs and available infrastructure.

As the decision on who will win this contract gets closer more of the companies involved in the production of the two contenders will be announcing deals like this. India’s policies require this investment and in the long run it only makes good business sense.

Photo from tony.evans Flickr photostream.

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