(Source: BloombergQuint)

Defence Expo 2018: L&T Not Happy With Evolving Rules For Defence Partnerships

India’s largest engineering company isn’t happy with how rules for strategic partnership with global defence manufacturers have evolved as the world’s largest importer of arms looks to boost local manufacturing.

The goal behind the strategic partnership programme was to work with a particular company in a specific field, SN Subrahmanyan, managing director and chief executive officer of Larsen & Toubro Ltd., said on the sidelines of the Defence Expo 2018 in Chennai. “Along the way, other ideas have come up. Now we are talking of two players; public sector defence companies are also coming in.”

Prime Minister Narendra Modi wants global fighter jets to missile makers to tie up with Indian companies to locally manufacture defence equipment. That will help create jobs, one of the key promises when he swept to power in 2014. Companies like Lockheed Martin, Saab, BAE Systems, Boeing, Airbus have found local partners as they eye orders worth $300 billion over the next decade.

The strategic partnership model aims to create a vibrant defence manufacturing ecosystem in the country through involvement of both the major Indian corporates as well as the MSME sector.

The earlier plan was that the partner would be responsible for developing a particular system and, in the process, get the expertise and generate cash flows, he said. But L&T hasn’t given up.

I would say companies like L&T don’t get frustrated. We face imaginary impossibilities.
SN Subrahmanyan, MD & CEO, L&T

L&T has tied up with foreign partners like Navantia to provide technology for submarines and Hanwha Techwin for guns. “We have the capabilities in production of hulls and internal systems for submarines and hope we are the selected,” Subrahmanyan said.

L&T has defence orders worth Rs 15,000 crore, including the K-9 Vajra, the self-propelling Howitzer order it bagged last year. It will provide 100 guns for Rs 4,500 crore. “We have produced 10 guns from the Hazira, Gujarat facility and is awaiting tests. We will complete this order in the next three years,” Subrahmanyan said.

L&T, which has often faced criticism from analysts for blocking huge capital in defence, doesn’t want to get into other categories.

We are not trying to broad-base our activities into other areas like Air Force.
SN Subrahmanyan, MD & CEO, L&T