The seven firms fighting over India’s $620 billion defence market

Discussion in 'Defence & Strategic Issues' started by W.G.Ewald, Feb 23, 2015.

  1. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

    Sep 28, 2011
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    North Carolina, USA
    From first timers such as motorcycle maker Hero Group to established players such as the Tata’s, India’s private firms now wants a slice of the country’s defence sector pie.
    Much of that has to do with prime minister Narendra Modi’s plans to transform India—from its current position as the world’s largest importer of military equipment—into a manufacturing powerhouse as the country’s defence spending is expected to swell to $620 billion (Rs38 lakh crore) by 2022.
    And with foreign direct investment in the defence industry revised to 49%, the Indian private sector is also scouting for foreign partners with $130 billion of military contracts up for grabs in the next few years.
    These seven firms are emerging as the frontrunners, as India finally looks to build it domestic defence manufacturing prowess.
    Tata Group

    The Tata’s have partnered with India’s armed forces for over half a century. And after building everything from army vehicles to missile components in group companies like Tata Motors and Tata Advanced Systems, the conglomerate is now out looking for new partners to execute new projects.
    In September 2014, Tata Power SED tied up with Honeywell International to build defence navigators. A month later, Tata Advanced Systems announced a partnership with Airbus to build 56 aircrafts for the Indian Air Force.
    Tata group companies in defence and aerospace businesses currently have an order book of Rs10,000 crore ($1.6 billion).
    Mahindra Group

    The group’s ride in the automotive sector began with a license to assemble the Willys jeep, a rugged vehicle that became a legend of sorts during the Second World War. That later turned into a long-term relationship with the Indian army as a supplier of trucks, armoured vehicles and other equipment.
    The group has now created two verticals under the defence divisions to focus on land defence and naval defence. Last year, the $16.5 billion group opened a new underwater systems and naval applications manufacturing facility in Pune, which will produce torpedo launchers and radars.
    It is reportedly also in the fray to buy Gujarat-based Pipavav Defence and Offshore Engineering Company, among the country’s biggest private sector shipyards that builds vessels for the Indian navy.
    Hero Group

    After starting out as a manufacturer of bicycle components and becoming the world’s largest two wheeler company, the Hero group is making big plans for the defence industry.
    On Feb. 18, the Munjal family—promoters of the $5 billion Hero group—sold a 4% stake in the company for Rs1,870 crore ($300 million) to reportedly raise money for investing in the defence sector. Some of that money might go towards purchasing Pipavav Defence; it is competing with the Mahindra Group to buy the shipyard.
    Reliance Anil Dhirubhai Ambani Group

    Formed out of the division of the Reliance group founded by Dhirubhai Ambani, the $28 billion conglomerate—with interests in power and telecom—announced its foray into the defence sector on Feb. 12. It plans to set up a defence smart city to import components, systems and subsystems and later export finished products.
    The company has also set up a subsidiary, Reliance Defence and Aerospace, which will bid for 387 Army reconnaissance and surveillance helicopters and 100 Naval utility helicopters, together valued at Rs25,000 crore ($4 billion).
    Reliance Industries

    Reliance Industries—India’s largest private firm, promoted by the country’s richest man Mukesh Ambani—is present in all the critical sectors of the Indian economy. After establishing interests in everything from petroleum, retail, natural gas, telecom and media to healthcare and pharmaceuticals, Reliance has been attempted to make inroads into defence for a while.
    In 2012, it partnered with Boeing to help build P8I naval reconnaissance aircraft for the Indian Navy. A year later, Reliance also signed a deal to supply components for Dassault aviation, which plans to build medium multi role combat aircrafts (MMRCA) for the Indian Air Force. But that landmark $20 billion MMCRA deal is still hanging fire.
    Bharat Forge

    The $2.5 billion Kalyani Group, of which Bharat Forge is the flagship company, announced a partnership with Israel’s Rafael on Feb. 19. The 51:49 joint venture, where Kalyani will hold majority stake, will make Spike anti-tank guided missiles for the Indian armed forces.
    Earlier this year, the company also announced its plan to set up a Rs600 crore ($100 million) defence manufacturing facility in Gujarat, and is in talks with the Indian army to test its ultra light gun and artillery guns. The group’s relationship with India’s armed forced started in the 1980’s but was strengthened when it was roped in to build shells on for the Bofors gun on an emergency basis during the Kargil conflict in 1999.
    Hinduja Group

    The $25 billion London-based Hinduja group, makers of Ashok Leyland buses and trucks, has had an eventful relationship with India’s defence sector. In 1991, three promoters of the company were accused of corruption in the Bofors arms deal scandal.
    That chequered history notwithstanding, it has already committed $10 billion of investments in India across sectors and last year partnered with Larsen & Toubro for the mounted guns artillery program of the Indian navy. In 2008, the group also set up Ashok Leyland Defence Systems, which manufactures armoured vehicles for the armed forces.
    The seven homegrown firms fighting over India’s $620 billion defence market – Quartz

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