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Tata Motors to double defence revenues over next three years

10 July, 2015, Business Standard

img_20150727111804687Tata Motors Ltd plans to double the revenue from its defence business over the next three years to $600 million, betting on the government’s push for more local defence manufacturing, a top company official said on Friday.

Indian companies are investing billions to build anything from armoured trucks, to guns and submarines, as they race to win a share of the roughly $100 billion in defence deals New Delhi has said it will ring-fence for domestic firms over the next decade.

Prime Minister Narendra Modi has vowed to modernise the country’s poorly-equipped military by turning India into a defence manufacturing hub that would end its status as the world’s largest arms importer.

Tata Motors, part of Tata Group, generated about Rs 2,000 crore ($316 million) in revenue from defence over the last three years, about 3% of the company’s total revenues.

“A year after the present government came into power and files started moving, there was a very quick acceleration of orders,” Vernon Noronha, Vice-President, Defence & Government Business, told journalists at an event on Friday.

Tata said it had won an order from the Indian army, worth about Rs 900 crore, for more than 1,200 multi-axle vehicles for loading and unloading ammunition.

The company has a defence order book for about Rs 1,500 crore, and it would compete for 700 light armoured multi-roll vehicles and 100 wheeled armoured personnel carriers that the military has said it wants to procure, Noronha said.

The push to get local firms making more has struggled in the past: opaque procedures, unrealistic quality requirements and slow decision-making have discouraged companies from bidding, forcing the government to look overseas for 70% of its arms.

Defence Minister Manohar Parrikar has pledged to unveil production policies to address the concerns of private firms investing in defence, which include Mahindra Group, Reliance Group and Larsen and Toubro.

($1 = 63.3900 rupees)

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