In combat mode

Slowly but surely, corporate India is getting a larger chunk of the money spent in the defence and aerospace industries. Last fortnight, two of the country’s premier conglomerates got into a huddle with the global biggies in these fields to manufacture vehicles for defence as well as to supply key components that go into helicopters and aero planes. Mahindra Defence Systems, a Mahindra Group company, is in dialogue with UK-based defence and aerospace company, BAE Systems, to develop a mine-protected vehicle.

“Soldiers look for vehicles that give them protection. Initially, we will be looking to supply these vehicles to the police and paramilitary forces. We will have a different version for the Army,” says Brigadier Khutub Hai, CEO, Mahindra Defence Systems. Today, these vehicles are made by the ordnance factory and Hai thinks there is space for one more player. “This is a highly complex technology. Our target is to sell 30-40 vehicles per year,” he adds. Mahindra Defence intends to supply prototypes in about a year and Hai expects sales to commence three years from now. Hai also reveals that the company is setting up a greenfield facility close to Faridabad to make light bulletproof and high-mobility vehicles. Speaking at the sidelines of the DefExpo held in the capital last fortnight, Anand Mahindra, Vice Chairman, M&M, said: “We feel that the addressable market for land-systems alone is around $3 billion. Through Mahindra Defence Systems, we can not only address this need but also requirements in avionics, sea-based systems and software.”

The other big Indian group that appears set to go the whole hog in defence is the Tata Group. Group company Tata Industries will form a joint venture with Boeing. A statement issued by the company indicates that this alliance “will initially include more than $500 million (Rs 2,000 crore) of defence-related aerospace component work in India for export to Boeing and its international customers.”

It is expected that the JV will be established by June 2008. “The joint venture between Tata and Boeing is an important part of our strategy to build capabilities in defence and aerospace” is how Chairman Ratan Tata had put it. During the first phase of the agreement, there will be defence-related component manufacturing for aircraft used by the US Navy and the Royal Australian Air Force.

Tata Industries has also announced that it will be joining hands with Sikorsky Aircraft Corporation, a subsidiary of United Technologies, to manufacture the S-92 helicopter cabins in India. Tata Motors has launched its Tata Light Specialist Vehicle (LSV), which has been built to military standards. The Tatas’ interest in defence doesn’t stop there. Tata Advanced Systems (a wholly-owned subsidiary of Tata Industries) has joined hands with EADS Defence and Security for the Indian Army’s proposed $1-billion Advanced Tactical Communications Systems Project. The same company is also exploring opportunities with Urban Aeronautics, Israel, for marketing and manufacturing innovative unmanned aerial vehicles.

The Tatas and the Mahindras are the more high-profile business groups eyeing the huge defence pie (in 2006-07 the government’s de-fence budget stood at Rs 89,000 crore; defence spending is expected to cross Rs 1.2 lakh crore over the next 3-4 years). Lesser-known players, too, are inking alliances with the global biggies. The Noida headquartered Precision Electronics, for instance, has signed a memorandum of understanding with American defence technology giant Raytheon. The agreement will facilitate developing and providing communications technology for India’s military forces.

— Krishna Gopalan