L&T, Punj Lloyd plan to tap Rs 2 lakh-cr defence orders

Defence ministry finalised strategic partnership model at a meeting of Defence Acquisition Council

With the government approval for a new strategic partnership policy in the defence sector, domestic manufacturers are hopeful of exploring huge order book opportunities.

“The strategic partnership policy is a big boost for Make in India in the defence sector. It will open up opportunities worth about Rs 2 lakh crore in defence manufacturing over the next 10 years,” said 

J D Patil, senior vice-president and head of defence and aerospace, Larsen & Toubro. 

Others such as Punj Lloyd look to partnerships to cash in on the opportunity. 

Ashok Wadhawan, president, manufacturing, Punj Lloyd, said, “The policy is the right strategy for the sector, as private players can now take the lead in production. Projects will be executed on time and cluster manufacturing will develop. We will partner with other players in designing and manufacturing large sub-systems for platforms just as we have been so for DRDO, OFB and HAL.” 

However, some are awaiting clarity on whether a single company will be allowed to partner for more than one of the four platforms. “We will need to wait for the fine print,” a source in the sector said.

Some others expect the number of platforms would be restricted. 

“In the meeting held with industry officials earlier, it was indicated each manufacturer would be allowed partnership for just one platform,” said another source on the condition of anonymity.

The defence ministry finalised the strategic partnership model at a meeting of the Defence Acquisition Council (DAC) on May 20. 

The policy envisages the establishment of long-term strategic partnerships with qualified domestic sector majors. The Indian companies would tie-up with global OEMs, to seek technology transfer and manufacturing know-how to set up domestic manufacturing infrastructure and supply chains.

The defence ministry on Wednesday said four segments have been finalised for the model — fighter aircraft, helicopters, submarines and armoured vehicles. 

Of these, industry officials expect orders worth Rs 60,000 crore from the submarine segment, another Rs 60,000 crore from single-engine fighters, Rs 50,000 crore for the armoured-vehicle segment, and Rs 12,000 crore for the helicopter requirements.

Amber Dubey, partner and India head of aerospace and defence at global consultancy KPMG, expects ordering activity to start within a year. 

“Since we are ordering off-the-shelf products with minor adjustments according to Indian requirements, the first order should be placed in six months to a year. This is presuming we don’t spend two years or more in carrying out field trials in India across locations and seasons,” Dubey said.

With inputs from Reuters