Godrej Group To Invest Heavily In Indian Defense Sector

The USD 1.7 billion Godrej Group plans to give a major push to its military equipment supply business, even as the government moves toward creating a level-playing field to private sector in manufacturing defence hardware.

"We are already in nuclear and space technology and... now plan to vigorously pursue the defence business where we scent immense potential," group chairman Adi Godrej told.

Godrej and Boyce Manufacturing Company Ltd is already a supplier of airframe sections for the Brahmos missile, besides equipment for satellite launch vehicles built by the Indian Space Research Organisation. The group also supplies equipment for the nuclear sector, both civilian and military and equipment for refineries. The group, whose revenues in 2006-07 touched USD 1.7 billion dollars, expects huge earnings from the nuclear business once the Indo-US civil nuclear deal is cleared.

Plans to pursue the defence supply business comes days after the government short-listed 13 private firms for granting the status of Rakshya Udyog Ratna. The list was handed over to Defence Minister A K Antony by Probir Sengupta, the chairman of the government-appointed selection committee, on June 6. Though it was not clear which firms made it to the list, such a status will pave the way for them to easily access foreign technology and collaboration to make sophisticated military hardware. It will also allow them to bid on par with state-run ordnance factories for military systems contracts.

Asked about the group's future plans, Godrej declined to give details, saying "it will not be appropriate for me to unveil the full plan as it is a sensitive matter." The Indian government had opened up the defence sector to private players in 2001 and the move to grant Rur status would pave the way for upto 26 per cent FDI.

The Ministry of Defence proposes to award contracts for defence production to private players worth Rs 20,000- 30,000-crore in the near future as a part of its initiative to source some of its requirements from private sector players. Both the Tatas and L&T have already secured licences for manufacturing several defence-related products from guns to tanks to battleships.

L&T is already planning to set up a ship-building yard which will manufacture battleships besides mulling a collaboration with Hindustan Aeronautics for aircraft parts. Apart from L&T and the Tatas, M&M and Ashok Leyland too supply vehicles to the military. A couple of foreign private players such as Lockheed Martin and Rolls Royce are also reportedly eyeing the high-potential Indian defence sector.

Godrej said, "We already supply equipment for satellites and certain other components for launch vehicles and their engines. He, however, ruled out the group entering the infrastructure sector.