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A ‘Different’ Foreign Investment

In what may be seen as a huge boost for the Indian defence sector, Swedish firm Saab has decided to manufacture Carl-Gustaf M4 weapon system in the South Asian nation. A senior Saab official has confirmed the news, saying that they would manufacture the Carl-Gustaf M4 shoulder-fired weapon system under the Make in India initiative of the Government of India in order to bolster indigenous defence manufacturing. However, it is not yet clear where the factory would be built. It may be noted that the M4 weapon system is capable of firing a variety of ammunition, including anti-armour and illumination rounds, with the maximum range being 1,500mt.

According to the Swedish defence firm, a new company, called Saab FFV India, will start manufacturing the latest rocket launchers in India in 2024, for the Indian Armed Forces, along with components for users of the weapon system. In a rare first, Saab has planned to manufacture the Carl-Gustaf M4 rocket launchers outside of Sweden. However, the Indian Army has been using weapons, manufactured by Saab, since 1976.

Gorgen Johansson, the Dynamics-Business Chief of Saab, has stressed: “We are glad to be able to contribute to the Indian Government’s goals of developing a world class defence industry and proud to offer the Indian Armed Forces our Carl-Gustaf M4 made in India.” However, Johansson did not give any details about this investment. He added that the Swedish firm would continue its partnership with Munitions India Limited and Advanced Weapons and Equipment India Limited to manufacture the earlier M3 variant of the Carl-Gustaf weapon and ammunition.

Meanwhile, a senior official of the Indian Ministry of Defence has informed the media that Saab wants to set up the new venture through the 100% Foreign Direct Investment (FDI) route, although the Scandinavian firm will pursue the 74% FDI option with an Indian partner (in case the 100% FDI does not work out). India allows 100% FDI in the defence sector only on a case-by-case basis.

The Narendra Modi Administration in New Delhi has taken several steps in recent times to promote India’s self-reliance in the defence manufacturing sector, by increasing the volume of the FDI from 49% to 74%. The Government of India has also notified three lists of 310 weapons and systems that cannot be imported, creating a separate budget to purchase locally made military hardware. For his part, military affairs expert Lieutenant General (Retired) Vinod Bhatia stressed: “The Carl-Gustaf is a proven weapon system which the Indian Army has used for decades. The setting up of a local manufacturing facility for the M4 variant by Saab is in line with the ‘Make in India’ initiative. We need more original equipment manufacturers to set up manufacturing facilities in India. It will provide a boost to the ‘Atmanirbhar Bharat’ (or Self-reliant India) campaign.

Saab has agreed to partner with Indian suppliers, and to fully meet the requirements of the Make in India initiative by manufacturing the M4 systems in the Indian facility. Saab FFV India shall deploy complex technologies, including the latest sighting technology and advanced manufacturing techniques, for the Carl-Gustaf M4 weapon system.

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