July 30, 2015

What does the Lockheed Martin-Sikorsky Aircraft deal mean for India?

Lockheed Martin Corp.’s landmark deal to buy United Technologies Corp.’s Sikorsky Aircraft for over $8 billion could make F-35 fighter jet maker Lockheed also bid in Indian defence deals for military helicopters.
Lockheed Martin agreed to buy Sikorsky unit, Bloomberg reported on Monday.
The acquisition will pave the way for Lockheed Martin to expand its play in India from military fixed-wing platforms to also military rotaries for upcoming tenders like naval utility helicopters and other mission-specific requirements, according to Rahul Gangal, partner at Roland Berger Strategy Consultants, a global strategy consulting firm.
Lockheed Martin is competing for an order for more than $2 billion worth of maritime aircraft. “Sikorsky will have a stronger balance sheet, as well as access to complementary product and payload technologies to make stronger product offers to India. India will also find legal structuring of technology transfer and compliance better as both have demonstratable past track record,” Gangal said.
Lockheed Martin, based in Bethesda, Maryland in the US, and Sikorsky are trying to tempt India with an offering that includes the more capable MH-60R helicopter to fight against ships coupled with the basic MH-60S helicopter to help lower costs, Bloomberg reported separately on Monday, quoting George Barton, vice-president for business development at Lockheed Martin Mission Systems and Sensors.
India is poised to kick off the competition for a contract to make at least 75 naval helicopters.
“The maritime helicopter market is unique in that countries have to protect the sea-lines of communications,” Barton said in an interview to Bloomberg at the Euronaval maritime conference at Le Bourget on the northern outskirts of Paris.
Lockheed Martin and Sikorsky, who developed the MH-60R for the US Navy and sold the system to Australia last year, see Saudi Arabia, Qatar, the United Arab Emirates, as well as Malaysia, Singapore and Thailand among potential buyers, Barton said.
Thailand last year already agreed to buy the MH-60S.
There could be more in the store.
Deba R. Mohanty, chairman and chief executive of defence and technology consultancy Indicia Research and Advisory, pointed out that for Lockheed Martin, this actually asks for a realignment of defence business in India and a next phase of collaborative arrangements between Lockheed Martin and prospective Indian partners is not ruled out.
“Buying out of one global giant by another normally denoted two implications. Firstly, it consolidates business, and thus deeper penetration in global market as a formidable supplier. This is a positive for India. Secondly, it also creates challenges of multilateral diplomacy in arms trade. This also has implication for India,” Mohanty said.
In December last year, the Indian Navy had selected Sikorsky aircraft to fulfill the service’s multipurpose helicopter requirement for anti-submarine and anti-surface warfare (ASW/ASuW).
Negotiations will now begin to procure 16 S-70B Seahawk helicopters, with an option for eight additional aircraft, along with a complete logistics support and training program, Sikorsky had said in December.
Sikorsky Aircraft is a one of the leaders in the design, manufacture and service of military and commercial helicopters; fixed-wing aircraft; spare parts and maintenance, repair and overhaul services for helicopters and fixed-wing aircraft; and civil helicopter operations. Sikorsky helicopters are used by all five branches of the US armed forces, along with military services and commercial operators in 40 nations.
The products of Sikorsky include Black Hawk and Seahawk helicopters for defence and S-76 and S-92 helicopters for commercial aviation.
On the other side, Lockheed Martin is the largest US weapons maker.

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