The $130 Billion Battle For India's Defence Pie

Kanpur-based MKU may not be a familiar name for civilians but over three million soldiers in 100 countries use its fibreglass helmets, snow boots and bullet-proof jackets. It recently designed Veer Helmet, a ballistic head gear that can accommodate turbans worn by Sikh soldiers. Its production units in India and Germany serve over 230 forces. MKU got attention in 2016 when it bagged an army order for 1.58 lakh ballistic helmets worth ₹170 crore. In past three-four years, it has also become an optronics (optical electronics) specialist and developed, among other things, night vision devices and thermal weapon sights that use heat to spot the enemy in the dark.

Down South, Rangsons Defence & Aerospace specialises in high-tech satcom and reducing heat generated by aircraft, apart from aviation tubes, hoses and ducts. Part of Mysuru-based N. Ranga Rao & Sons which built iconic brand Cycle Pure agarbattis, today, besides Indian defence forces, Defence Research And Development Organisation (DRDO), Hindustan Aeronautics Ltd. (HAL) and ISRO, Rangsons supplies to Boeing, Honeywell, Liebherr, IAI, GE and Siemens. Pavan Ranga, a third-generation scion, started an electronics business that he later sold to focus on defence electronics. "We expect a compound annual growth rate (CAGR) of 65% for next five years at least," says Pavan Ranga, chairman, Rangsons.

There are more. Such as Captain Nikunj Parashar, who founded Pune-based start-up Sagar Defence Engineering in 2015 to build unmanned marine surface vehicles using robotics and artificial intelligence (AI). "It took us five years to get the first contract from DRDO for ₹9.5 lakh. Today, we are executing orders worth $2 million," he says at the recent DefExpo.

S. Ghoshal, a mechanical engineer who worked with Larsen & Toubro (L&T) for 20 years, runs Suryadipta Projects, an MSME that makes small ships and precision machinery at Ghodbunder in Thane, Mumbai. In early March last year, Suryadipta got an order for 11 'Ammunition Cum Torpedo Cum Missile' barges from Indian Navy.

But leading the way are the big guns of India Inc. Cut to Tata Boeing Aerospace factory in Telangana. The joint venture makes aero-structures for Boeing's AH-64 Apache helicopter. It is adding a production line for complex vertical fin structures for Boeing 737. Tata Advanced Systems and Airbus Defence And Space (Airbus DS) recently signed a ₹21,935 crore deal to build C-295 medium-lift transport aircraft at Vadodara to replace Indian Air Force's (IAF's) Avro fleet. The Tatas have also signed an agreement with Lockheed Martin to make F-21 Block 70 fighter aircraft in India.

L&T MBDA Missile Systems is supplying air-to-air missile launchers and sub-systems to MBDA France for Rafale fighter jets from its facility in Coimbatore. L&T's shipyard in Hazira is building ships for the navy. It had ₹14,000 crore defence orders in first half of FY23 and is hoping to finish the financial year with double the number.

At Mahindra Group headquarters in Mumbai, S.P. Shukla, chairman of Mahindra Defence & Aerospace, is busy inspecting rollout plans of a new defence platform. Mahindra Defence recently bagged three orders, for armoured specialist vehicles, niche underwater systems and airport surveillance radars. "In coming years, the industry would have opportunities in several segments, including armoured/combat vehicles, aircraft, ships etc., which will be integrated with systems, including radars, sonars, radios and launchers, developed in India," says Shukla, also president of Society of Indian Defence Manufacturers. "MoD (Ministry Of Defence) has also indicated that several large platforms in advanced armoured segment are being considered in Make-I category of Make In India," says Shukla. Make-I projects get 70% of government funding (up to ₹250 crore) for prototype development.

India's defence manufacturing industry is coming of age. Players, small and big, old and new, are getting ready to lay their hands on the lucrative defence and aerospace opportunity they had been waiting for years, if not decades like in case of L&T, Mahindra, Tata and Godrej. The reason is simple. Top officials say India is going to spend ₹1.5 lakh crore a year on average till 2030 to modernise its armed forces. The ₹10.5 lakh crore ($130 billion) opportunity over next seven years has opened floodgates of entrepreneurial energy in India's young private sector defence manufacturing ecosystem. And these numbers may be conservative. For FY24 alone, capital outlay for defence modernisation and infrastructure development is ₹1.63 lakh crore. Of this, 75%, or nearly ₹1.2 lakh crore, will go to domestic firms as part of government focus on indigenisation. "Domestic manufacturing of bigger and complex defence platforms has become the focus of our policy under Atmanirbhar Bharat Abhiyan. We plan to spend $130 billion on military modernisation," Defence Minister Rajnath Singh said at Aero Show in Bangalore in 2021. "We hope to realise an ecosystem of MSMEs and start-ups," Samir V. Kamat, secretary, Department Of Defence Research And Development and chairman of DRDO said at the recent DefExpo in Gandhinagar.

The key word is indigenisation. India has taken a number of steps to encourage local manufacturing, procurement and private sector participation in defence sector. The biggest being import ban on 411 weapons, platforms and systems that will be indigenised in phases from 2022 to 2030. These include high-value imports such as lightweight tanks, naval utility helicopters, artillery guns, various missiles, destroyers, light combat, transport and basic trainer aircraft, as well as lower-value imports such as spare parts, small components and sub-systems for fighters, ships, submarines and tanks. Government has also released three 'positive indigenisation lists' of 3,738 components imported by defence public sector undertakings, or DPSUs, which buy foreign products worth ₹39,000 crore in a year. Most will be indigenised in coming years; 25% will be reserved for the private sector.

India has the second-largest defence force in the world. It is also the third-largest military spender ($76.6 billion in 2021) after the U.S. ($801 billion) and China ($293 billion). It led the list of top five arms importers between 2017 and 2021. At 16% growth a year, MoD's capital outlay for FY21-26 will be ₹9.01 lakh crore, says a Lok Sabha Secretariat note, 'Modernisation of Indian Armed Forces And Capital Outlay In Defence Budget'. But this is just 50% of capital needed for modernisation of the forces, which is about ₹17.46 lakh crore for the period, says the report.

The army has a long list of foreign origin equipment that has become obsolete and is running over 90 modernisation projects worth over ₹1.37 lakh crore. "Nearly 68% of our equipment is in vintage category, 24% in current category and 8% in state-of-the-art category," the then Vice-Chief of Army Staff, Lt. Gen. Sarath Chand, told the Standing Committee On Defence in 2018. The ideal ratio is one-third in all three categories, he said. The 15-year indigenisation plan (2015-30) of Indian Navy envisages an increase in fleet size from 150 to 200 by 2027. IAF's 'Indigenisation Roadmap (2016-2025)' expects capital acquisition projects worth $33 billion (₹2.5 lakh crore).

As against this, in FY22, domestic defence and aerospace manufacturing, including ₹12,814 crore exports, was just ₹84,644 crore—largely by 40-plus ordnance factories recently re-organised into seven DPSUs and marquee DPSUs such as HAL.

With at least 25% of the ₹10.5 lakh crore pie earmarked for private sector, established private players such as Tata, L&T, Mahindra, Godrej, Bharat Forge and Adani Defence are roping in global technology leaders as partners and building capabilities to tap not only Indian but also world markets. India's defence industry is well on its path to make high-end products such as tanks, armoured vehicles, fighter aircraft, helicopters, warships, submarines, missiles, electronic equipment, special alloys, special purpose steels and a wide variety of ammunition. The country is witnessing partnerships among legacy players, MSMEs, start-ups, DRDO, DPSUs and Army Design Bureau to make India a defence production hub. Development of hi-tech equipment by private players will reduce defence forces' dependence on foreign vendors, says Shukla, who believes India can have several defence companies with revenues of $1-3 billion within a decade.

The Opportunity

India was meeting just 20% defence needs domestically until a few decades ago. Former Soviet Union was source of the bulk of imports. "It is a paradox that while India has one of the largest defence industrial complexes in the developing world, it continues to be overwhelmingly dependent on imports for arms and equipment," Richard McCallum, vice chair, UKIBC India, says in a UK India Business Council-KPMG report.

Domestic procurement climbed to 68% in FY22. FY24 target is 75%. The number is projected to rise further in FY24-30 as a result of ban on import of more products. Union Budget 2023 increased allocation for defence by 13% to ₹5.93 lakh crore. This gives India an opportunity to build a flourishing defence industry for the world.

Every global security crisis creates opportunities. The U.S. defence industry became world's number one during World War-II by investing $2.7 billion those days. The war effort created an industry that was worth several trillion dollars in a few decades. Russia-Ukraine war, recent challenges on borders and desire to indigenise have created a similar opportunity for India. While India's defence ordnance factories and DPSUs employ about 1.5 lakh people and generate ₹45,000 crore or $5 billion-plus revenues, the U.S. defence and aerospace industry employs 25 lakh people, 2% of the country's labour force and 18% of its manufacturing labour force. The U.S. industry exports equipment worth $150 billion and pays $60 billion tax every year.

Global Opportunity

Local production of nex-gen products will pit India's defence industry as a supplier to the lucrative global market. Any Made in India equipment bought by Indian defence forces can be sold anywhere in the world, say industry experts. "Given the adversaries and challenges in our landscape, the items we induct are top-class, which is an advantage for exporting to any country," former Air Chief Marshal R.K.S. Bhadauria, chief nodal officer of Uttar Pradesh Defence Industrial Corridor, says at DefExpo 2022.

India is already making its presence felt in the global market. Its defence exports, which ranged between ₹800 crore and ₹1,300 crore until 2015, surged to ₹14,000 crore in FY22 and are set to touch ₹17,000 crore in FY23. Large export orders have started coming in. In January-end, the Philippines signed a $374.96-million deal with BrahMos Aerospace for shore-based anti-ship variant of BrahMos supersonic cruise missile. It was the first export order for the missile, developed by India and Russia.

In November, Bharat Forge's subsidiary, Kalyani Strategic Systems, bagged an export order worth $155 million for 155-mm artillery guns. Same month, L&T got a contract for supplying Teevra 40-mm guns to Indonesian Navy. A few months before that, Armenia signed a $250 million contract for Pinaka missiles, made by DPSUs such as Bharat Dynamics and private players like Tata Advanced Systems and L&T.

The global defence market is ever expanding. It grew at 8.2% CAGR from $474.69 billion in 2021 to $513.57 billion in 2022 and is expected to reach $581.84 billion in 2026, says a Business Research Company report. The number becomes $2.5 trillion if we add military aerospace applications. That would pit India in direct competition with world's biggest arms exporters. The list has U.S. (39% global exports), Russia (19%), France (11%), China (4.6%) and Germany (4.5%), according to global defence data specialist Stockholm International Peace Research Institute.

The Take-Off

The biggest development since India decided to allow private sector in defence has been recent collaboration between Tata Advanced Systems and Airbus DS for manufacturing and assembling C-295 medium-lift tactical transport aircraft. The ₹21,935 crore contract will involve Tata Advanced Systems producing 40 fly-away C-295 aircraft and providing MRO (maintenance, repair and operations) support and service for IAF's 56 aircraft. "The programme will create more than 15,000 skilled direct and indirect jobs across the aerospace ecosystem with more than 100 suppliers," says a Tata Group spokesperson. The group is consolidating aerospace and defence capabilities under Tata Aerospace & Defence (Tata A&D) to leverage the upcoming opportunities. "We combined the strength of group companies for building businesses like consumer products, defence and electric mobility," Tata Group Chairman N. Chandrasekaran recently told Fortune India.

Some big orders have already been awarded. Garden Reach Shipbuilders & Engineers and partner L&T are constructing eight anti-submarine shallow-water craft as part of a ₹6,311 crore order. Cochin Shipyard is executing a similar deal. HAL is making 83 Mk1A fighter jets as part of a ₹48,000 crore MoD order apart from 12 light utility helicopters for ₹1,500 crore.

L&T is making two multi-purpose naval vessels for ₹887 crore and 41 modular bridges worth ₹2,585 crore. It is also expecting orders for K-9 Vajra artillery guns and in-house designed submarines.

Bharat Forge's order book, mainly guns and mounted vehicles, is ₹2,000 crore-plus. "Over last five-six years, we have built platforms for towed guns, mounted guns and ultra-light howitzers. All these have been 100% indigenously designed, developed and manufactured," says Rajinder Bhatia, president and CEO, BFL Defence. Talking about joint ventures, armed forces will soon get an advanced towed artillery gun system (ATAGS) developed by DRDO with Bharat Forge and Tata Advanced Systems as initial partners. The army will procure 150 ATAGS for ₹3,365 crore. "It is superior to other guns in all aspects. It can fire five-round bursts as compared with three-round bursts of other contemporary foreign guns," says Bhatia.

Another legacy major Mahindra Defence Systems is executing a ₹1,056 crore order from army for 1,300 light specialist combat vehicles and a ₹1,349.9 crore order from navy for integrated anti-submarine warfare defence suite.

"Two of our 14 divisions are dedicated to aerospace and defence," says Kaustubh Shukla, chief operating officer, Industrial Products Group, Godrej & Boyce, which supplies most of the metallic sub-systems in BrahMos missile.

Global Biggies Eye India

Global players are also looking at working with Indian defence forces and private players. "In 2021, Boeing Defence India launched Boeing India Repair Development And Sustainment hub as an in-country alliance of suppliers led by Boeing in India to set up MRO facilities in the region," says Surendra Ahuja, managing director, Boeing Defence India.

BAE Systems, which has got a $542 million contract to provide 145 M777 ultra-lightweight howitzers to the army, has tied up with PTC Industries to make titanium castings.

This year, Collins Aerospace, part of U.S.-based Raytheon Technologies, one of the world's largest suppliers of aerospace and defence products, completed 25 years of manufacturing in India. "We are one of the first Indian entities to domestically produce and export an aviation product to U.S. Collins has multiple manufacturing locations in Bengaluru and is aligning support to Make in India policy as we continue to expand in India," says Parag Wadhawan, executive director of Asia Operations at Collins Aerospace.

The Trickle-Down Effect

The race is not limited to missiles, tanks, ships and fighter jets. Soldiers require a range of equipment right from helmets, suits and night vision cameras to advanced sleeping bags. A host of small and medium companies are tapping the opportunity. "Defence electronics is a huge opportunity. Our defence equipment has obsolete electronics," says Sudhir Naik, chairman of India Electronics and Semiconductor Association, Gujarat chapter.

One of the beneficiaries will be Centum Electronics, which provides electronics manufacturing and engineering R&D services and earns 44% revenue from defence modules and sub-systems. The management is expecting double-digit revenue growth over next two-three years.

Defence and aerospace electronics player Data Patterns grew revenues by 33% a year over three years to ₹310 crore in FY22. Most of its ₹480 crore order book comprises radars and electronic locks. It is doubling capacity at its facility in Chennai in expectation of ₹2,000-3,000 crore orders, largely radars, electronic warfare systems and next-gen ground receivers.

Paras Defence & Space Technologies, a specialist in defence/space optics, electronics, EMP (electro-magnetic pulse) products and heavy engineering with revenues of ₹182.6 crore in FY22, expects 50% sales growth over next three-five years. It had an order book of ₹600 crore in FY22 and is expecting a huge jump in FY23. Government's 'positive list of indigenisation' includes products like EMP racks/cabinets, EMP filters and a few other products made solely by Paras.

Then there are new-comers like Hawking Defence Services, a specialist in anti-drone solutions and drone swarms. It has developed prototypes of drone detector and jammer, GPS spoofer and drone flare and has got orders for 1,200 units of anti-drone detectors and jammers, says a Yes Securities report on defence companies.

Drone maker NewSpace Research & Technologies, which reported ₹15.9 crore revenues last year, mainly from sale of Multi Rotor Unmanned System, had a ₹125 crore order book in FY22. It plans to switch to unmanned technology through products such as intelligent UAV swarming, collaborative autonomy and cyber physical systems. It is expecting ₹115 crore orders in FY23. But its flagship programme is Air Launched Flexible Assets (ALFA), UAVs that can be launched from fighter aircraft that it is building with HAL. The global market for such UAVs is estimated to be $400 million. Another is augmented reality head mounted display (ARHMD). The army is procuring 556 ARHMD systems. NewSpace is among the three short-listed vendors.

To enable AI adoption, government has created Defence AI Council and Defence AI Project Agency. A total of 70 defence AI projects are under development at each of the seven DPSUs. Further, DRDO has developed a fully autonomous UAV and will soon transfer the technology to the industry.

Defence training, drone and anti‐drone specialist Zen Technologies, which reported ₹69.8 crore revenues in FY22, expects to grow at 25% CAGR over next two-three years. It has an order book of ₹430 crore for FY23. "Ban on import of items like simulators is going to benefit Zen," says Viral Shah, an analyst with Yes Securities.

The Coming MSME Boom

In February 2021, MoD placed a ₹7,523 crore order with Heavy Vehicles Factory at Avadi, Chennai, for 118 Arjun Mk-1A for the army. This single order will generate business for over 200 Indian vendors, including MSMEs, and provide jobs to around 8,000 people.

Already, 12,000 MSMEs operate in India's defence sector. Centre funds them through iDEX, set up by Defence Innovation Organisation which, in turn, was founded by HAL and BEL to fund innovation in the sector. iDEX has spent ₹500 crore on nine companies till date. These start-ups are guided by the Army Design Bureau, Indigenisation and Innovation Organisation and Directorate Of Aerospace Design.

The biggies are also hand-holding MSMEs. "Boeing, present in India for over eight decades, spends over $1 billion annually to procure from a network of over 300 Indian partners. It is by far the largest foreign original equipment maker in terms of sourcing from India. Over 25% of our suppliers from India are MSMEs," says Salil Gupte, president, Boeing India.

Over two years till March 2022, L&T supplied to the army 100 K9 VAJRA-T self-propelled howitzer guns, made with South Korea's Hanwha. "K9 had 50% indigenous content by value and 80% by work packages at the programme level," says J.D. Patil. It involved local production of over 13,000 components per gun system through a supply chain of 500 Indian Tier-1 partners. Over 100 were MSMEs. L&T is expecting repeat orders. Mahindra & Mahindra and Godrej are also working with an extensive partner ecosystem.

Policy: Where It Began

The indigenisation wave started five-six years ago when defence ministry worked on a presentation for Prime Minister Narendra Modi on urgent need to modernise armed forces with focus on Make in India and private sector participation. "We realised that to attract private players, we need to give them commitments, and those have to come from army, navy and air force, which procure ammunition and other items to the tune of ₹1,50,000 crore every year. Out of this, we were importing 50-60%," Rajkumar, additional chief secretary of Gujarat who was secretary of Defence Production earlier and one of the architects of country's atmanirbhar plans in defence, told delegates at the recent DefExpo in Gandhinagar.

But the biggest step to bring the vision to fruition was import ban on major products such as 410 different types of weapons and platforms, including lightweight tanks, naval utility helicopters, artillery guns, missiles, destroyers, ship-borne cruise missiles, light combat aircraft, light transport aircraft, long-range land-attack cruise missiles, basic trainer aircraft and multi-barrel rocket launchers, just to name a few. The 'Positive Indigenisation Lists' for DPSUs also helped.

This was followed by decisions such as simplification of industrial licensing process, allowing 74% foreign direct investment under automatic route, simplification of approvals and processes and launch of iDEX and indigenisation portal Srijan. Government also reformed the offset policy with thrust on attracting investments and technology. Further, DRDO identified nine areas for focused research—platforms, weapon systems, strategic systems, sensors & communication systems, space, cyber security, AI & robotics, material & devices and soldier support. Government also promised at least 25% procurement from the private sector.

"Earlier, it was a closed ecosystem as government was the producer as well as the user. Thus, innovation remained low. To push R&D in defence, 25% defence R&D budget will be used for R&D in private sector," Samir V. Kamat of Department of Defence Research And Development said at DefExpo.

In order to get states on board too, two defence industrial corridors were set up, in Uttar Pradesh and Tamil Nadu, which together have attracted investment commitments of ₹24,000 crore. A total of ₹2,242 crore and ₹3,847 crore have already been invested in Uttar Pradesh Defence Industrial Corridor and Tamil Nadu Defence Industrial Corridor, respectively, say top officials in MoD.

What More

India has launched a Technology Development Fund for the defence sector. Two months ago, allocation per project was enhanced from ₹10 crore to ₹50 crore. U.S. government, in contrast, invests nearly $3 billion a year in about 250 defence start-ups a year. Israel invests 5% of its GDP in R&D (India spends less than 1%).

Experts like J.D. Patil and S.P. Shukla say more needs to be done to build defence companies that have billions of dollars in revenues. They want focus on projects that can help industry build intellectual property (IP), make India self-reliant and capture big export markets. "While we have seen good traction in Make-II (industry-funded projects) in recent years, Make-I (joint funding by MoD and industry) is yet to take off as it is fraught with uncertainty," says J.D. Patil. Make-I programmes can help India build platform capability and bag large export orders.

The key to building a thriving ecosystem is creating capacities and utilisation by placing orders, says Shukla. "When orders for large platforms are placed, the original equipment maker of the platform places orders with its vendors, which are mostly MSMEs. The orders benefit both large companies and MSMEs," he says.

The industry is worried about the non-level playing field between private and public sector. They point at issues like preferential treatment to DPSUs, Customs duty exemption, bank guarantees, etc. "DPSUs enjoy government funded assets for competitive programmes without a capital charge while private companies must invest in asset creation as well as incur servicing costs," says Patil.

With policy initiatives in place and economy back on track post Covid-19, the private defence sector is now awaiting large orders to make India self-reliant in defence production so that the country can get its next Boeings and Lockheed Martins.

How India Inc Is Prepping Up

Tatas: Consolidation Mode

The Tatas are consolidating aerospace and defence businesses under Tata Aerospace & Defence, or Tata A&D, which will bring together Tata Motors' Defence Division, TAL Manufacturing Solutions (subsidiary of Tata Motors), Tata Power's Strategic Engineering Division, Tata Advanced Materials and Tata Advanced Systems. "Tata A&D will allow us to better target opportunities in aerospace and defence. We will become more globally competitive and better equipped to execute larger and more complex projects," says a Tata Group spokesperson.

Tata Boeing Aerospace factory in Telangana is making aero-structures for Boeing's AH-64 Apache helicopter. It is adding a production line for complex vertical fin structures for Boeing 737. Tata Advanced Systems and Airbus Defence And Space recently signed a ₹21,935 crore deal to build C-295 medium-lift transport aircraft. Tata A&D will bet on land mobility options such as multi-axle combat support vehicles, light armoured vehicles, light support vehicles, mine protected vehicles, light armoured multi-role combat vehicles, wheeled armoured amphibious platforms and tracked amphibious platforms such as futuristic infantry combat vehicle and future ready combat vehicle. It will also target airborne platforms, rotary platforms, fixed wing platforms, mission systems and avionics as well as work on mini and micro unmanned aerial vehicles.

L&T: Doubling Order Book

L&T had a ₹14,000 crore defence order book in H1 of FY23. It expects to double this by FY23-end. "We are looking forward to programmes such as artillery systems, integrated air defence systems, radars, combat engineering systems and warships in coming two-three quarters," says J.D. Patil, whole-time director & senior executive vice president (Defence & Smart Technologies), L&T.

He says in mid to long term, the company hopes to get orders in artillery, armoured, combat engineering, air defence segments of army and air force, apart from warships and submarines for the navy. L&T is also investing in unmanned autonomous systems.

The L&T shipyard has built over 70 warships till date. At present, it is constructing two multi-purpose vessels, three large survey vessels and four anti-submarine warfare shallow water craft. L&T MBDA Missile Systems (LTMMSL), a joint venture with MBDA of Europe, is executing export contracts for air-to-air missile launchers and missile sub-systems for Rafale fighters. LTMMSL, which supplies short and medium range missiles to Navy, has also developed a latest version of Exocet anti-ship missile system and a niche 5th-generation anti-tank guided missile for army and special forces, says Patil.

Adani Group: Small Arms & UAVs

The Adani Group is building defence capabilities in more than 20 locations. These include Adani Aerospace Park in Bangalore, a UAV facility in Hyderabad and a defence cluster in Mundra. The group is working with DRDO to industrialise general purpose bombs, missiles and precision-guided munitions. It has successfully tested very short range air defence and unmanned precision guided missiles.

Adani is the first private company to have end-to-end development and manufacturing ecosystem for small arms. Adani Defence is developing South Asia's largest ammunition hub in UP Defence corridor that will have a first-of-its-kind facility for strategic loitering kamikaze drones. "We are starting a small and large calibre ammunition factory in UP Defence park. It will be operational next year," says Ashish Rajvanshi, CEO, Adani Aerospace & Defence.

The group is also looking at unmanned aerial systems, counter drones and aircraft services. It has tied up with Israel's Elbit Systems to establish India's first UAV facility in Hyderabad. In 2018, Adani had signed an agreement with Saab to make Gripen fighter aircraft in India.

"The group's foray into defence is based on four pillars—collaborate with global partners, focus on platforms and technologies of critical importance, set up an ecosystem of capabilities through investment in MSMEs and facilities of global standards," Gautam Adani, chairman, Adani Group, said in an interaction with Fortune India.

Godrej & Boyce: Rockets To Missiles

Godrej made critical equipment such as L110 engine and CE20 engine for launcher of indigenously developed GSLV Mk III rocket, thrusters for Orbiter and Lander and many components for Chandrayaan-II, India's second lunar mission. Godrej Aerospace has been associated with BrahMos programme since its inception in 2001 and makes most of its metallic sub-systems. Besides the main airframe, it supplies control surfaces, nose cap, mobile autonomous launchers, missile replenishing vehicles, etc., for land-launched versions of BrahMos. It also supplies land systems such as missile launchers and carriers and naval systems like hull equipment, life raft container ejection system and steering gear.

"Two of our 14 divisions are dedicated to aerospace and defence. They employ over 1,200 people," says Kaustubh Shukla, chief operating officer, Industrial Products Group, Godrej & Boyce. Some recent orders include a self-propelled mechanical mine-layer. Sources say Godrej is planning to build a ₹250 crore facility for aerospace and defence at Khalapur near Mumbai as part of plans to triple capacity in next three-five years.

Mahindra: Vehicles To New Platforms

The Mahindra Group, which commenced its business activities by marketing war-surplus Jeeps in India after WW-II, builds and markets armoured vehicles, underwater protection systems, radars and surveillance equipment to armed forces. Mahindra's Defence Land Systems is making special military vehicles near Faridabad. Mahindra Emirates Vehicle Armouring, located in the U.A.E., supplies premium armoured vehicles globally. Pune-based Mahindra Defence Naval Systems makes underwater protection systems and composite components. Mahindra Telephonics Integrated Systems, a joint venture between Mahindra Defence Systems and Telephonics Corporation of U.S., makes radars and communication and surveillance systems. Pune-based Mahindra Defence Naval Systems makes components and weapon systems while Mahindra Defence Systems makes heavy armoured vehicles.

Mahindra has also developed a mobile, all-weather, all-terrain platform with multiple sensors integrated with a command and control system. "We recently won three major MoD projects, for armoured specialist vehicles, niche underwater systems and airport surveillance radars. We are expanding capacity in NCR and Pune," says S.P. Shukla, chairman of Mahindra Group's defence and aerospace business.

Bharat Forge: Guns, Weapons And Vehicles

Baba Kalyani's $3 billion Kalyani group has expanded in last 12 years to build a formidable portfolio comprising artillery guns, protected vehicles, armoured fighting vehicles, missiles, air defence solutions, small arms and defence electronics. Some of its marquee products are MArG ER, a light-weight howitzer gun, ultra-light howitzer MArG T, mountain gun system MGS 4x4 and light-weight field gun Garuda 105 V2.

Now, the group is working on entering niche technologies like loitering ammunition and unmanned systems, including unmanned ground aerial and underwater vehicles. It is also developing state-of-the-art unmanned underwater systems for navy which will be ready for trials by next year. It recently unveiled Bharat 150, a multi-payload, variable mission drone. The craft comes with an indigenously developed radio communication system and Inertial Navigation System with anti-jamming and anti-spoofing capabilities.

The group signed four big MoUs in defence last year—with General Atomics of U.S. to develop technologies for surface, undersea and advanced projectiles for weapons platforms, with aerospace technology specialist Paramount Group to develop land systems and aerospace platforms, with Arsenal JSCo of Bulgaria to manufacture specific small arms and with Dastan of Kyrgyzstan for underwater naval weapons like torpedoes.