BAE Systems has withdrawn from the joint venture Defense Land Systems India (DLSI), with Indian partner Mahindra buying out the company’s 26% stake and taking sole ownership.

“Since the establishment in 2009 of the joint venture, DLSI, there has been significant evolution in the Indian land systems market,” says an official Mahindra & Mahindra’s defense unit. “Developments in both the industry environment and in customer procurement frameworks and acquisition strategies have led the shareholders to conduct a strategic review of the DLSI business.”

The decision to end the venture does not preclude the possibility of BAE and Mahindra joining forces on future defense projects.

“The decision is a reflection of the shareholders’ belief they can best meet emerging customer requirements and address the opportunities in this dynamic market with a flexible, tailored approach that was not easily facilitated by the structure of the existing joint venture entity,” he says, without disclosing financial details of the agreement.

The two sides say they will continue “to explore opportunities for cooperating on specific defense projects.”

DLSI, located near India’s national capital of New Delhi, makes mine-protected and up-armored light vehicles as well as artillery systems and other selected land systems weapons and upgrades.

Mahindra & Mahindra is also in collaboration with U.S.-based Telephonics Corp. to establish a plant in India to make airborne radar systems for the country’s defense sector. The joint venture plans to provide systems for air traffic management services, homeland security and other emerging defense surveillance requirements, as well as for the civilian applications.

Mahindra also has another joint venture with Arabia Holdings and Ras Al Khaimah Transport Investments to make and sell armored vehicles to the United Arab Emirates.

In December, Mahindra acquired partner Navistar’s stake in two joint ventures — Mahindra Navistar Automotives and Mahindra Navistar Engines.