Tata Group eyes 40% turnover growth in defence manufacturing

Written by Mihir Mishra | New Delhi | Updated: Feb 12 2014, 15:46pm hrs
Tata GroupTata Group has said that it welcomes the idea of making India self-reliant in defence equipment and weapons manufacturing.
The Tata Group has said that it welcomes the idea of making India self-reliant in defence equipment and weapons manufacturing.

Mukund Rajan, member group executive council and brand custodian, Tata Sons, made the comment in Delhi while announcing that the group has raised its turnover outlook from the sector by 40 per cent to Rs 2,400 crore in FY14. He was responding to a query on the comment made by BJPs Prime Ministerial candidate Narendra Modi in Mumbai on Tuesday that the country should become an exporter of weapons instead of being an importer.

The answer to this question would be easy. This is something, which we welcome, because it will beneficial for the country as well as our company, Rajan said. India currently imports over 70 per cent of its total defence equipment needs, as per government sources.

We believe, as a group, we are ready to enter into any defence sector the government opens up Rajan added. He also pushed for an increase in foreign direct investment (FDI) limit in the sector.

Theres no doubt that India needs relaxation of foreign direct investment norms in the defence sector, he said. The group supports an increase in FDI cap to 49 per cent in the sector.

The defence industry in India has been seeking a hike in the FDI cap. Last year, the government decided to allow FDI above 26 per cent on a case-to-case basis after approval of the Cabinet Committee on Security.

According to FY14 Budget, Indias capital expenditure on defence services was increased to Rs 86,741 crore from Rs 69,579 crore in FY13. A large part of this investment goes to foreign companies, who are under the offset policy, bound to invest 30 per cent of the value of a contract in purchases, investments and transfer of technology to India.

Out of the over 100 operating companies that the group has, 14 entities, including Tata Motors, Tata Advanced Systems and Tata Power (Strategic Engineering Division), are currently suppliers for various Indian defence requirements.

The order book size is in the excess of Rs 8,000 crore and these are to be fulfilled in the next one to four years, Rajan said. Highlighting the advancement that the group has achieved in various areas of the defence sector, he added that some of the group companies have become exclusive suppliers to global original defence equipment makers, apart from playing strategic roles in Indias missile programmes.