Defence PSUs have orders worth Rs 2.32 trn, HAL order book at Rs 59,832 cr

The government informed Parliament on Wednesday that the order books of the defence ministry’s nine defence public sector undertakings (DPSUs) currently amount to Rs 2.32 trillion.

The biggest among them is Hindustan Aeronautics (HAL), with an order book of Rs 59,832 crore. Given its turnover last year of just over Rs 20,000 crore, that amounts to assured production orders for the next three years. This includes on-going orders for some 15 Sukhoi-30MKI fighters, 24 more Tejas light combat aircraft and a range of indigenously designed and built helicopters.

Close on HAL’s heels is Bharat Electronics (BEL), with orders in hand worth Rs 56,300 crore. With BEL’s turnover last year standing at Rs 12,237 crore, that is four-and-a-half years of orders in hand, for radars and missiles such as the Akash system.

At third place is Mazagon Dock, Mumbai (MDL) with an order book worth Rs 52,113 crore. Based on its current annual turnover of Rs 5,092 crore, that will keep MDL busy for the next decade. The shipyard is required to deliver four more Scorpene submarines, four Project 15B destroyers and four Project 17A frigates. In addition, it is competing strongly for another Rs 45,000 crore order to build six more submarines under Project 75-I.

Between them, the four DPSUs shipyards — MDL, Garden Reach Shipbuilders and Engineers (GRSE), Goa Shipyard (GSL) and Hindustan Shipyard (HSL) — have orders in hand worth Rs 97,278 crore. The bulk of these are “nominated” orders, which means the defence ministry has awarded them without competitive tendering.

Private sector shipyards such as Larsen & Toubro and Reliance Naval are struggling for orders, as their production facilities remain grossly underutilised.

Answering another question in Parliament, the defence ministry also claimed success in expediting defence procurement.

“In the past three years from 2016-17 to 2018-19 and current year till Sept 2019, Government has accorded Acceptance of Necessity (AoN) to 130 proposals, worth Rs 2.64 trillion approximately, under various categories of capital procurement which promotes domestic manufacturing as per DPP-2016,” stated the defence ministry.

Not one of these clearances has yet resulted in an order, with the procurement process usually taking well over five years for an AoN to translate into an order.

The defence ministry informed Parliament that, besides 41 Ordnance Factories and nine DPSUs in the public sector, “275 Licensed companies and approximately 42,000 (private sector) vendors of OFB and DPSUs are engaged in defence production.”

Together, these firms have productionised, or are in the process of building indigenous products, developed by the Defence R&D Organisation (DRDO), worth over Rs 2.75 trillion.

These include the Tejas fighter, Arjun tanks, naval sonars, various radars, electronic warfare systems, torpedoes, Pinaka rocket launchers and the Agni, Prithvi, BrahMos and Akash missiles.