Mumbai: Anil Ambani’s Reliance Group has applied to the Department of Industrial Policy and Promotion (DIPP), the nodal agency for foreign direct investment, for licenses to make defence and aerospace products.
Group companies that applied for licenses on 17 June are Reliance SED Ltd, Reliance Naval Systems Ltd, Reliance Unmanned Systems Ltd and Reliance Aerostructure Ltd, according to the DIPP website. These companies want licenses to manufacture, among other things, scientific investigation ships, parts and accessories of aircraft and spacecraft, engines, turbines and radar equipment.
Earlier, on 15 June, the group had sought industrial licenses to manufacture helicopters, weapons, ammunition and spacecraft. The companies that applied for these licenses include Reliance Helicopters Ltd, Reliance Propulsion System Ltd, Reliance Aerostructure Ltd, Reliance Land Systems Ltd and Reliance Technologies Pvt. Ltd.
India will see a total defence budget allocation of $620 billion between financial year 2014 and 2022, of which 50% will be on capital expenditure, according to a report released in February by industry lobby Federation of Indian Chambers of Commerce and Industry and financial services company Centrum Capital Ltd.
The annual opportunity for Indian companies—both state-owned and private—is expected to touch $41 billion by financial year 2022 and $168 billion cumulatively, it said.
In March, Reliance Infrastructure Ltd, a part of Anil Ambani’s Reliance Group, announced its entry into defence and aerospace manufacturing sector by acquiring management control of shipbuilding firm Pipavav Defence and Offshore Engineering Co. Ltd in a deal worth Rs.819 crore for an 18% stake. This was followed by an open offer.
The Reliance Group and the Adani Group are the latest to enter the defence market. Adani Group’s unit has already filed an application to make helicopters.
Bharat Forge Ltd, Reliance Industries Ltd, the Tata Group, Larsen and Toubro Ltd (L&T), the Godrej Group and the Mahindra Group are fairly well entrenched in the business and are looking for more opportunities.
“The gamut of industrial licenses, as sought by the Reliance Group, is good news. In the first instance, the license applications and domain areas seem too wide and I am not sure as to what the group is capable of. Once we get to know Reliance Group’s fructified negotiations with its foreign counterparts, we can make assumptions on how it is going to perform in the Indian military-industrial complex,” said Deba R. Mohanty, chairman and chief executive at defence and technology consultancy Indicia Research & Advisory.
Mohanty said a formidable Indian company, with requisite industrial, engineering and technical experience, is always a great candidate for defence engineering projects.
“Given the track record of the Ambanis, I expect a challenging performance from the Reliance Group in times to come. My fingers are crossed,” Mohanty added.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case .