NEW DELHI — India's largest private sector engineering conglomerate, worth $16 billion, with 5 percent of its revenue coming from defense deals, aims to triple its defense business over the next five years.
Larsen & Toubro (L&T), however, says since its defense-related numbers are not in the public domain, quantifying the same at this stage would not be feasible.
L&T entered the sector in the 1980s, but after the defense sector in India opened its arms to new business in 2001, L&T evolved from research and product development to serial production while continuing to build indigenous products and participate in co-development mode with state-owned Defence Research and Development Organization (DRDO).
The company's head of aerospace and defense, Jayant Damodar Patil, in an exclusive interview with Defense News, shared the secret of L&T's success in the defense sector and its future plans.
How is the journey post opening the defense business to private players?
The lost hopes of industry is seen reviving over the last two years with the Ministry of Defence (MoD) leadership making transformational changes in the latest version of defense procurement procedure (DPP-2016) with an intent to simplify, demystify defense acquisition, and evolve and implement a trust-based partnership model with private industry.
The conducive policy framework and environment are truly encouraging, and it is now up to the implementation layers of the [Indian] government to put the stated changes into practice and treat the private sector inclusively and on par with [the] government-owned sector in a level playing field.
How was L&T's experience post opening up the defense sector?
As far as L&T is concerned, post opening up of the defense sector in 2001, we evolved from R&D [research and development] and product development to serial production while continuing to build indigenous products of our own as well as in co-development mode with DRDO. We invested the past decade in taking a number of our products to serial production level and creating new factories, infrastructure, capabilities and skills.
Today, we produce 17 systems in serial production and the number is continuously growing. Concurrently, we developed capabilities and capacities of building system-of-systems — say, for instance, a submarine, a ship, complete communication solution; a battle tank or a complete weapons system, from target acquisition system to shooters. While we do that, we also work with all the DPSU [Defence Public Sector Undertakings] system integrators in Tier 1 mode on weapon and engineering systems for land and naval warfare domains and major subsystems for [the] air warfare domain.
Is Make in India for the defense sector realistic?
The current leadership has put defense manufacturing at the core of its Make in India initiative, and focus has shifted to self-reliance in this strategic sector while concurrently pursuing defense exports to balance the imports.
Concurrent policy changes including liberal Foreign Direct Investment policy; relaxed licensing norms; new offset guidelines; defense export policy; [and a] revamped and simpler DPP-2016 have been put in place to give a push to [the] Make in India initiative.
On the acquisition side, the Defence Acquisition Council has, in the recent past, cleared major programs in naval platforms, artillery systems, air defense systems, and aircrafts and helicopters for Indian companies to participate, and there are more programs in [the] pipeline. Thus, there has been a visible and significant shift towards promoting domestic procurements, although there is some time until these start creating revenues for defense players.
Such policy initiatives, complemented with a speedup of acquisition process, would certainly ensure the success of Make in India, contribute immensely to India’s GDP [gross domestic product], cut out present dependence on exports and accomplish India’s ambition of becoming a regional superpower.
How L&T can manufacture competitive defense products?
L&T has participated in [a] large number of the global tenders for complex weapon systems, radar systems and platforms. To give you an example of our competitiveness, the K9 [Tracked Self-Propelled Gun] system developed by L&T in collaboration with Samsung Techwin (Hanwa) of South Korea emerged the only gun system to qualify the user-evaluation trials, meeting the stringent technical requirements in a global competition — a first in many decades in India. Although this is a "buy global" program, we are prime contractors with above 50 percent work share, and the guns would be integrated and delivered from our factory at Talegaon near Pune.
When it comes to systems developed in partnership with DRDO, the level of indigenization achieved in various weapon systems and engineering systems developed by L&T have been in the range of 75 percent to 95 percent, way above the prescribed minimum indigenous content required as per MoD procurement categories.
The high[ly] indigenous content has been synonymous with higher competitiveness.
What are your in-house defense R&D initiatives?
Our Product & Technology Development Centre (PTDC) focuses on new product development and development of improved technologies for system upgrades including mechanical systems, engineering equipment and systems, secure communication, avionics, sensors, defense electronics, and submarine and warship designs. The PTDC focuses specifically on the technology domains of welding and metallurgy, advanced composite materials, heat transfer, hydrodynamics, computational fluid dynamics, stress analysis, controls and drives, microwave and RF [radio frequency], embedded systems, high availability systems, and military communication systems.
In-house-funded initiatives have been taken for development of gun technologies, radar, unmanned autonomous systems (UGVs, UWVs and UAVs), fire control systems and mobility solutions. The center is also engaged in developing solutions for the three Make [in India] programs of the Indian MoD relating to tactical communication systems (TCS), battlefield management systems (BMS) and futuristic infantry combat vehicle (FICV).
The center is also working in collaboration with DRDO towards realization of an air-independent propulsion (AIP) system for submarines.
How robust are your defense production capabilities?
[In regard to] production capabilities, L&T’s aerospace and defense operations span four dedicated and world-class production facilities. These include our state-of-the-art Greenfield Shipyard at Kattupalli (near Chennai) set up in addition to a shipyard at Hazira; Strategic Systems Complex at Talegaon (near Pune), which undertakes assembly and integration of land and naval weapon systems, land and naval engineering systems, artillery systems; Precision Manufacturing and Systems Complex at Coimbatore, which produces precision airframe assemblies, components and subsystems for missiles and aerospace; and our Strategic Electronics Centre at Bangalore, which undertakes production of military communication systems and avionics.
Besides these dedicated manufacturing facilities, L&T has also identified work centers within L&T’s production centers at Hazira for submarine pressure hull manufacturing; at Ranoli for advanced composites; and at Powai for prototype development and testing. L&T also operates a site at Visakhapatnam for strategic programs.
What projects has L&T executed in the past three to five years?
L&T's contribution to the strategic program is unique and [has] significantly contributed toward building the first of the class [nuclear] submarine Arihant.
L&T is a partner to state enterprises for indigenization of naval weapon systems and engineering system onboard the warships being built in these yards. Some of the key projects executed are BrahMos launchers and fire control systems, ASW rocket launchers, torpedo launchers, stabilized platforms for Revathi radar, and a variety of naval engineering systems fitted on front-line warships.
In collaboration with DRDO, L&T has developed the entire range of mobile-bridging systems for the Indian Army, airdrop platforms and presently production of the tank-mounted bridges is in progress. We await serialization clearance for Sarvatra and short-span bridging systems while orders for one more short-span bridging system is awaited. We have developed an indigenous modular bridging system undergoing trials as we speak. As partners to the Akash missile program, we deliver launchers as well as radar masts and missile-propulsion airframe. We built advanced composites and exotic metals capabilities for [the] BrahMos missile and deliver naval weapon systems including modular launching systems and fire control systems [as well as] more than a dozen subsystems for the missile.
What defense projects you are hoping to win in the next 10 years?
We expect some major programs to fructify soon within next one year. These include self-propelled tracked gun system, military communication station, Project Akash missiles sections and launchers for Air Force and Army, [and] Army bridging systems (10-meter short span). We also await GS evaluation announcement for towed gun systems. On the shipbuilding front, some of the major shipbuilding programs, which are likely to be ordered during the next two years, include landing platform dock, ASW corvettes, large survey vessels, multipurpose vessels, diving-support vessels, next-generation missile corvettes, etc. We are also looking forward to major refits of submarines and warships. These offer a combined potential of over $7.5 billion in the near term.
In medium to long term we expect the ordering of the submarine programs and warship programs like new-generation missile vessels, new-gen naval corvettes, etc. We also await ordering of development of the three Make [in India] programs (TCS, BMS and FICV) and serial production orders for these programs.
We also continue to support DPSU shipyards (MDL, GRSE, GSL and HSL) with naval weapon systems, engineering systems, life-support systems and logistics systems in Tier 1 role. This is also the case with state enterprises BEL, BDL, BEML and OFB for radar masts, launchers, missile subsystems, Sarvatra bridges and bridging systems.