BAE Systems, Europe’s largest defence contractor, is to expand its presence in the rapidly growing Indian market by setting up a joint venture focused on armoured vehicles.

The company said on Wednesday that it had received approval from India’s foreign investment regulator to set up a partnership with vehicle maker Mahindra & Mahindra. The decision is an important step in the British company’s plans to build its defence business in India. Its ambitions are to position itself to participate in the modernisation of India’s armed forces, among the world’s largest, by entering partnerships with local companies.