New Delhi. The government has approved the Joint Venture between Mahindra & Mahindra and BAE Systems but only with 26 per cent equity for the latter.

The Foreign Investment Promotions Board cleared the proposal recently, a press statement issued by the two companies said here on January 7th. The JV will manufacture land systems like artillery guns and several other systems for the Indian armed forces.

BAE Systems described the venture as a key step in setting up the JV.

Headquartered in Delhi, with manufacturing in Faridabad on the outskirts of the Indian capital, the JV will initially employ 50-60 people. Initial work is likely to include the up-armouring of Rakshak vehicles, Axe vehicle production, and starting the process of developing a mine resistant ambush protected vehicle suitable for India.

In accordance with current Foreign Direct Investment regulations, the equity split will be 74% with Mahindra & Mahindra and 26% BAE Systems. Mahindra & Mahindra and BAE Systems will now .nalise detailed planning and structural arrangements with a view to commencing JV operations as early as Q2 2009.

Mr Anand Mahindra, Vice Chairman and Managing Director, Mahindra & Mahindra, said: “Our JV with BAE Systems is a strategic initiative by the Mahindra Group to achieve a leadership position in the land systems defence domain. I am certain that our companies are an excellent and complementary .t and the co-operation with a leader like BAE Systems will indeed help us design and develop cutting edge products. These solutions will provide greatly enhanced capability for our Indian land forces and open up export markets not previously within our reach.”

Mr Ian King, Chief Executive, BAE Systems, said: “This is an exciting opportunity and is the .rst step in BAE Systems’ plans to grow long term businesses in India in multiple sectors across the breadth and depth of the company’s global capabilities in land, sea, air and security. The ever strengthening relationship between Mahindra & Mahindra and BAE Systems is an excellent basis on which to develop a company that is founded with the express purpose of serving the Indian armed forces and the Indian economy through the creation of high quality jobs, the development of innovative technologies and system integration skills, and the leadership of two world class companies.”

BAE Systems is the premier global defence and aerospace company delivering a full range of products and services for air, land and naval forces, as well as advanced electronics, information technology solutions and customer support services. With approximately 100,000 employees worldwide, BAE Systems’ sales exceeded £15.7 billion (US $31.4 billion) in 2007.

The US $6.7 billion Mahindra Group is among the top 10 industrial houses in India. Mahindra is the market leader in multi-utility vehicles in India It made a milestone entry into the passenger car segment with the Logan. Mahindra & Mahindra is the only Indian company among the top tractor brands in the world. The Group also has a leading presence in key sectors of the Indian economy, including the financial services, trade, retail and logistics, automotive components, aftermarket, information technology and infrastructure development.

Mahindra is also one of only four Indian companies to receive an A+ rating from the Global Reporting Initiative (GRI) for its first Sustainability Report.