The companies are forming a joint venture to build and repair warships, and also commercial vessels, in the region, said a person close to the development, who did not want to be named. “The joint venture will open opportunities in the region over next 10 years for both the companies in excess of Rs.10,000 crore,” the person said.
ADSB is a regional provider of construction, repair and refit services for naval, military and commercial vessels in the region. It is 40% owned by Mubadala Development Company PJSC, 10% by Abu Dhabi’s government and 50% publicly traded on the United Arab Emirates’ stock exchange.
The pact could also see ADSB delivering maintenance, repair, overhaul and refit services to the vessels in line with regional requirements.
Reliance Group is likely to use its newly acquired shipbuilding facilities at Pipavav in Gujarat for implementation of this collaboration. The group did not disclose investment details in its statement issued on Monday.
“Skills developed and the experience gained through this collaboration will further add to Reliance Group’s capabilities and position it favourably as a strategic partner for Indian Navy’s future programs encompassing areas such as; combat management systems (CMS), integrated bridge solutions (IBS), combat system integration (CSI), integrated platform management systems (IPMS) and staff training and development,” the statement said.
This potential collaboration could help both firms expand their market share and address new opportunities, it said.
On 22 July, Reliance Group company Pipavav Defence and Offshore Engineering Co. Ltd and Russia’s JSC Ship Repairing Centre Zvyozdochka had agreed to jointly refit and certify submarines of the 877EKM category at an estimated Rs.11,000 crore.
Reliance Group is acquiring a majority stake in Pipavav Defence through an open offer, subject to necessary approvals.
Pipavav Defence had said the company proposes to execute the programme in a joint venture with the Russian firm, in which it will hold 51% stake.
India will see a defence budget allocation of $620 billion between fiscal 2014 and fiscal 2022, of which 50% will be capital expenditure, according to a February report released by industry group Federation of Indian Chambers of Commerce and Industry and financial services firm Centrum Capital Ltd.
The annual opportunity for Indian firms—both state-owned and private—is expected to be $41 billion by fiscal 2022 and $168 billion cumulatively, the report said.
In June, Reliance Group had applied to the department of industrial policy and promotion (DIPP), the nodal agency for foreign direct investment, for licences to make defence and aerospace products.
Group companies that applied for licenses are Reliance SED Ltd, Reliance Naval Systems Ltd, Reliance Unmanned Systems Ltd and Reliance Aerostructure Ltd, according to the DIPP website.
These firms want licences to manufacture, among other things, scientific investigation ships, parts and accessories of aircraft and spacecraft, engines, turbines and radar equipment.