L&T, Cassdian joint venture finally takes off

In view of the government altering its current foreign direct investment (FDI) limit in the defence sector from 26% to a higher percentage, the joint venture (JV) between L&T and Cassidian – defence and security division of European Aeronautic Defence & Space (EADS) – has included a provision that would automatically raise the foreign ownership as and when the new rule comes into force.
According to informed sources, who did not want to be named, it was on this assurance of subsequent relaxation of the FDI cap that Cassidian has agreed to invest in the JV.
Initially, the Franco-German defence and security company did not want to come in as a minority stakeholder in the JV.
“We are hoping things will change soon and the government will rethink on the 26% FDI cap in the defence sector. Also, when a foreign firm enters into a joint venture with a local company, the new entity automatically becomes an Indian company. So why put a cap of 26%,” K Sreekumar, who will be heading the L&T and Cassidian JV said.
11/02/11 Suparna Goswami Bhattacharya/Daily News & Analysis

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