Home >companies >news >Tata Motors secures Rs900 crore order from Indian Army

Mumbai: India’s biggest auto maker Tata Motors Ltd expects to double revenue from the defence business to 3,000 crore in three years as the Indian government encourages manufacturing of military equipment by local companies via the “Make In India" programme.

“The current order book is 1,500 crore and we want to double it in next three years. The ministry of defence intends to promote indigenous supply base for FICV (futuristic infantry combat vehicle)," said Vernon Noronha, the company’s vice-president, defence and government business.

Prime Minister Narendra Modi’s emphasis on defence equipment forming part of his Make in India campaign to encourage manufacturing and attract foreign investment has seen a scramble among companies readying manufacturing capabilities in the segment.

India’s defence budget allocation ie estimated at $620 billion between fiscal years 2014 and 2022, of which 50% will be capital expenditure, according to a report released in February by lobby group 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 fiscal year 2022 and $168 billion cumulatively, it said.

Noronha said Tata Motors had secured an order to supply around 1,200 of its high-mobility 6x6 multi-axle trucks from the Indian Army—the single largest order awarded to an Indian private original equipment manufacturer in land systems under the defence procurement procedures.

He said the value of this contract is 914 crore and the vehicles should be delivered in the next 24 months.

Tata Motors competed for the order with companies including Bharat Earth Movers Ltd and the MAN Group to secure the order.

Noronha said the order was a validation of the company’s strategy and the growth potential of its extensive range of defence vehicles.

The government has short-listed Tata Motors for providing the 800kg category of utility vehicles along with the Mahindra Group. The value of this order is over 300 crore. Tata Motors is also bidding for supplying 1,300 light armoured multipurpose vehicles costing around 1,300 crore.

Tata Motors has supplied over 100,000 vehicles to the Indian military and paramilitary forces, having been associated with the sector since 1958.

In the combat vehicle space, Tata Motors has designed and developed the wheeled armoured platform (WHAP), an armoured personnel carrier. Tata Motors has also developed a light armoured multi-role vehicle, a reconnaissance vehicle, combining vital operational prerequisites of mobility, protection and firepower.

To be sure, there are other Tata group companies that are focused in defence. Currently, 14 Tata companies are engaged in providing support to the country’s defence and aerospace sector.

These are the Tata Power Strategic Electronics Division, Tata Advanced Systems, TAL Manufacturing Solutions, Tata Technologies, Tata Motors, Tata Advanced Materials, Tata Consultancy Services, Tata Steel UK, Tata Elxsi, Titan Company (Precision Engineering Division), Avana Integrated Systems Ltd, Nova Integrated Systems Ltd, CMC, and Tata Industrial Services.

The Tata group expects revenue of 2,500 crore from its defence and aerospace business in the year to 31 March 2015, Mint reported on 11 February. The current order book size of the Tata group in the sector is above 10,000 crore.

Among the bigger and better-known entities eyeing a piece of the action in defence are Bharat Forge Ltd, Reliance Industries Ltd, Larsen and Toubro Ltd, the Godrej Group, the Mahindra Group, the Adani Group, Anil Ambani’s Reliance Group and Punj Lloyd Ltd.

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