Step in the right di­rec­tion

Joseph J. Battaglia, Pres­i­dent & CEO, Tele­phon­ics

SP's MAI - - MILITARY OEMSPEAK -

SP’s M.A.I. (SP’s) : What do you think about the 49 per cent FDI limit in­creased from 26 per cent re­cently? Joseph J. Battaglia: I be­lieve that in­creas­ing the FDI limit from 26 per cent to 49 per cent is cer­tainly a step in the right di­rec­tion. This new limit will en­cour­age US in­dus­try to much more se­ri­ously con­sider mak­ing in­vest­ments in In­dia. More of­ten than not, the US in­dus­try part­ner is pro­vid­ing in­tel­lec­tual prop­erty that they have spent many years and a great deal of in­ter­nal re­search and de­vel­op­ment money to de­velop and to es­sen­tially “give that away” for a 26 per cent share in a joint ven­ture does not al­ways prove to be a pru­dent decision. SP’s: What all can your company of­fer to In­dian with this change now ver­sus the past limit? Battaglia: Tele­phon­ics will be more will­ing to share some of the lat­est state-of-the-art tech­nol­ogy at the 49 per cent level than they might oth­er­wise want to do at the 26 per cent level. For In­dia that would mean leap-frog­ging to a higher, more so­phis­ti­cated tech­nol­ogy base more quickly. For the In­dian mil­i­tary, this would mean greater warfight­ing ca­pa­bil­i­ties and a greater level of readi­ness with which to con­front ad­ver­saries. SP’s: As on date can you brief us about your joint ac­tiv­i­ties with In­dian in­dus­try? And the business ar­range­ments in­volved in th­ese joint ac­tiv­i­ties? Battaglia: Tele­phon­ics is part­nered with the Mahin­dra De­fence Sys­tems (MDS), a di­vi­sion of Mahin­dra and Mahin­dra, in a clas­si­cal 26 per cent/74 per cent own­er­ship of the Mahin­dra Tele­phon­ics In­te­grated Sys­tems (MTIS) joint ven­ture (JV). The pur­pose of this JV is to trans­fer Tele­phon­ics’ ad­vanced radar and in­ter­com­mu­ni­ca­tion sys­tems tech­nol­ogy to MTIS, ul­ti­mately es­tab­lish­ing MTIS as the first in­dige­nous radar house in In­dia spe­cial­is­ing in weather radar, mar­itime surveil­lance radar, and in­ter­com­mu­ni­ca­tion man­age­ment sys­tems. Even­tu­ally, it is ex­pected that MTIS will ac­quire the ca­pa­bil­ity to de­sign, mod­ify, in­te­grate, and re­pair radar and in­ter­com­mu­ni­ca­tion sys­tems in In­dia for the In­dian mar­ket. SP’s: Why there seems to be a de­mand for 51 per cent FDI limit still? Is that jus­ti­fied? Battaglia: Rais­ing the FDI Limit to 51 per cent or even higher would be the “ic­ing on the cake” be­cause US com­pa­nies who have spent a great deal of fi­nan­cial, hu­man, and cap­i­tal re­sources de­vel­op­ing their in­tel­lec­tual prop­erty would truly (and jus­ti­fi­ably) want to con­trol the fate of their tech­nol­ogy. In fact, in some cases, de­pend­ing on the spe­cific tech­nol­ogy, they may be forced by US Gov­ern­ment reg­u­la­tions, to closely mon­i­tor what hap­pens to the tech­nol­ogy they trans­fer to a for­eign en­tity or they would not be per­mit­ted to trans­fer it. With a 51 per cent+ share of a JV, the US company would have more con­trol over that.

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