Thales Chief Executive Patrice Caine has urged India to ease its foreign direct investment (FDI) norms in the defence sector, arguing that simpler ownership rules could strengthen industry participation while maintaining national security safeguards.

Speaking during a visit to New Delhi, Caine suggested that India take cues from countries such as France, Australia and the UK, which permit foreign companies full ownership as long as intellectual property (IP) and strategic assets remain protected under domestic law.

India currently allows 100% foreign investment in the defence sector, but ownership beyond 74% in joint ventures requires prior government approval. This additional scrutiny, involving multiple clearances, has slowed several major proposals.

The government remains cautious about full ownership in such a sensitive industry, limiting it to select cases where technology transfer and strategic oversight are ensured. Sweden’s Saab is presently the only foreign defence firm with approval to operate a wholly-owned subsidiary in India, manufacturing anti-tank weapons under a ₹500 crore project.

Despite restrictions, global defence giants like Thales have pursued hybrid models involving joint ventures with Indian partners. The French company has partnered with major conglomerates such as Reliance Industries, TATA, Adani Group, and Mahindra to align with the government’s “Atmanirbhar Bharat” and Make in India initiatives. These collaborations have led to joint production of advanced avionics systems, precision weapons, and radar equipment for the Indian armed forces and export markets.

Caine acknowledged that Thales currently operates through a mixed model—maintaining joint ventures while also managing fully owned operations in compliant areas. He highlighted that joint ventures, although beneficial for technology sharing, tend to delay decision-making and operational alignment. A fully owned structure, he argued, would allow faster implementation and better coordination, particularly in high-value technological domains like avionics, radar, and cybersecurity.

Thales’ partnership with Reliance Defence, established in 2017, focuses on integrating and maintaining advanced radar systems and producing airborne electronics for platforms such as the Rafale fighter aircraft under the Indo-French offset agreement. In 2024, Thales entered another collaboration with Adani Defence & Aerospace to produce 70mm rockets in India, complete with local assembly and testing facilities. These ventures align with New Delhi’s broader drive to boost domestic manufacturing and self-reliance in advanced weapons and electronic systems.

Caine described his vision of a “magic triangle” comprising the pillars: Make in India, Innovate in India, and Export from India. He emphasised that India is not merely a low-cost manufacturing base but a rising centre of excellence in engineering, research, and innovation for Thales’ global operations. The company’s Indian teams are now deeply involved in designing avionics, mission systems, and digital solutions for international projects.

In addition to defence manufacturing, Thales has significantly expanded its civil aerospace footprint in India. The company is co-developing a next-generation flight management system for Airbus aircraft with its Indian engineering teams. In March 2025, Thales launched an avionics maintenance, repair and overhaul (MRO) facility near Delhi airport to service commercial fleets including IndiGo and other major carriers. This move signals Thales’ intent to shift from regional hubs to onshore, India-based support operations.

Caine’s appeal for FDI liberalisation comes amid rising global defence spending following heightened geopolitical tensions and India’s own security challenges, including a military conflict with Pakistan earlier this year. Stronger defence budgets in Europe have boosted Thales’ financial performance, leading the company to raise its 2025 sales growth forecast. Caine expects continued demand for avionics, cybersecurity systems, and military electronics as countries modernise their forces in response to evolving global threats.

Positioning India as a strategic cornerstone, Thales aims to deepen its integration with local suppliers, academia, and start-ups to create critical technologies indigenously. With its engineering hubs, joint ventures, and wholly owned projects, Thales plans to scale its operations beyond manufacturing to encompass R&D, digital innovation, and export-driven defence production. This expansion, underpinned by the “magic triangle,” solidifies India’s role as a central node in Thales’ global defence and aerospace ecosystem.

Based On ET News Report