L&T eyes $1 billion defence milestone as conglomerates power ahead
At a $1-billion defence business, only three local companies would be larger than L&T in the defence sector: Hindustan Aeronautics, Bharat Electronics and Mazagon Dock.
New Delhi: Larsen & Toubro Ltd. expects its defence business revenue to reach $1 billion this fiscal year, riding the government’s aggressive localization push. The milestone will cement its position as India's biggest private military equipment supplier and the fourth-largest after three state-owned peers.
“Defence is an important sector for L&T, and we have scaled up operations to the level of $1 billion this financial year," said Arun T Ramchandani, senior vice-president and head of precision engineering and systems at L&T. “In the long run, our goal is to scale up this business further, in order to contribute in a more significant way to the group business."
“We are seeing 95% of our defence revenue coming from within India itself, and we are working on multiple projects, including trials of a light tank for the Indian Army. We are also working on air defence system trials for the Air Force, and we expect defence to be a key vertical going forward," he said.
L&T’s growth in the business mirrors the government’s increased focus on defence modernization. The country spent $80 billion on defence equipment last year, making it the world's fifth-largest spender and the second-largest importer, after Ukraine, according to Goldman Sachs. The government has also made it mandatory to procure three-fourths of its annual defence purchases locally, up from 68% in 2022, bolstering demand for homegrown suppliers.
At a $1-billion (about ₹8,800 crore) defence business, only three local companies would be larger than L&T in the defence sector: Hindustan Aeronautics Ltd (HAL), which recorded ₹30,980.9 crore in revenue last year; Bharat Electronics Ltd (BEL) with ₹23,658 crore; and Mazagon Dock Shipbuilders Ltd with ₹11,431.9 crore.
Overall, L&T generated ₹1,31,662 crore ($14.9 billion) from seven business segments in the first six months of the fiscal. Infrastructure accounted for about 46%, followed by IT and energy projects, each at about 20%. The remaining 14% came from hi-tech manufacturing, financial services, development projects, and other sectors, including real estate.
Defence is part of precision engineering and systems within hi-tech manufacturing, which reported a revenue of ₹6,060 crore last year. In the first six months of the current fiscal, Precision Engineering and Systems’ revenue jumped 53% over a year earlier to ₹3,760 crore.
Budget boost
In the budget for 2025-26, India allocated ₹6.81 lakh crore for the defence sector, an increase of 9.53% from the previous year. The country is expected to spend $130 billion on defence modernization over the next seven years, according to Adani Enterprises’ annual report.
Last month, defence minister Rajnath Singh also notified a revamped procurement manual, stating that the three defence forces, along with other ministry of defence (MoD) agencies, can procure defence equipment worth ₹1 trillion from homegrown companies.
“Defense posture has now shifted from reactive to proactive, driven by secure indigenous systems and stronger deterrence platforms (aircraft defense and counter drone systems). The nature of the industry has evolved from a public-sector monopoly to an ecosystem involving private companies, start-ups, academia and global partnerships," Goldman Sachs analysts Amit Dixit and Kumari Rishika wrote in a 2 October note. “Indeed, India’s defense exports have crossed INR 236bn (US$2.8bn) in FY25, up from just INR 6.8bn (US$80mn) in FY14."
Conglomerates, a dozen public-sector defence enterprises, and more than two dozen smaller listed firms stand to gain from the localization push. Tata Group, Adani Group and Mahindra and Mahindra, as well as state-owned HAL, BEL, and Mazagon Dock have seen their defence revenue grow.
HAL makes fighter jets, jet engines and helicopters, while Bharat Electronics produces radars and weapon systems. Bharat Dynamics makes missiles and ammunition. Mazagon Dock Shipbuilders is the country’s largest naval shipyard.
Tata Group’s privately held Tata Advanced Systems reported a revenue of ₹5,176 crore last fiscal. Billionaire Gautam Adani’s flagship Adani Enterprises Ltd’s wholly owned subsidiary, Adani Defence Systems and Technologies Ltd, reported ₹2,007 crore in revenue; while Mahindra and Mahindra’s wholly owned subsidiary, Mahindra Defence Systems, recorded a topline of ₹960.17 crore in FY25.
Experts, however, suggest that companies should not only rely on Indian government orders.
“R&D investments will lead to the building of products, and coupled with that, companies must explore export opportunities to cater to select nations," said Shailender Arya, senior advisor at The Asia Group, a Washington-based business advisory group. “This will reduce their dependence on just the Indian government, where demand may not be uniform—and all of this can turn defence into significant business verticals for conglomerates with deep capabilities across industries."
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