BAE in talks for joint venture in India

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BAE Systems is in talks with Hindustan Aeronautics Ltd (HAL) to set up a joint venture to manufacture its Hawk training jets in India for export around the world.

The Hawk, used for pilot training by the Royal Air Force and by the Red Arrows aerobatic flying team, is already made under an agreement with BAE by the state-run company for the Indian Air Force. The companies are understood to be conducting feasibility studies into the possibility of setting up a venture that would increase Hawk production in the country, possibly making HAL a major producer of the jet with the ability to export it abroad. The extent of the potential alliance is unclear, though it could include maintenance and overhaul agreements for the jets.

The Indian navy is in the market for a new fleet of training jets, which is likely to be one of the main drivers of the early discussions between the two companies. Talks are still at a very early stage and could lead to nothing. A BAE spokesman declined to comment on what he called "market speculation."

If an alliance was struck, it would be an extension of BAE's relationship with HAL that stretches back to the 1980s when the company, under a licensing agreement similar to the current Hawk agreement, began making Jaguar fighter jets in India. Allowing the company to export Hawks would be a departure, however BAE refused an attempt in the 1990s by India to sell Jaguars to Bahrain.

There are currently only two orders for the Hawk, which are made at BAE's site in Brough, Humberside, and tested at Warton. One was placed by the RAF, the other is a 66-plane order from India, of which 42 are being built in India by HAL. The Indian Air Force took delivery of the first Brough-made Hawks in November.

The thin order book has raised fears about jobs in Brough. BAE recently lost in a competition to provide 64 jets to the United Arab Emirates, though it is understood to be in the running for similar contracts in Bahrain and Greece. More than 900 Hawks have been exported to a variety of countries since the first model was built in 1974, including more than 200 to America. The aircraft is used as a training aircraft for pilots before they move up to the more complex supersonic fighter jets.