Larsen & Toubro sees $28 billion golden goose in India’s defense orders

Fresh from winning its biggest defense contract in May, Larsen & Toubro Ltd. is planning to bid for $28 billion of orders including warships and submarines in India as Prime Minister Narendra Modi breaks with tradition to embrace private, local suppliers. India’s new defense purchase policy that allows non-state local firms to compete for orders from the military is helping the nation’s biggest engineering firm to become more ambitious, Jayant Patil, head of Larsen’s defense business, said in an interview. The company is building on its success with a $700 million order for artillery guns in May, unprecedented in size for a local contractor, he said. Modi’s ‘Make in India’ program to reduce reliance on imports has opened business prospects worth billions of dollars for companies such as Mumbai-based Larsen, which were earlier shunned by the government in favor of state-owned and foreign firms. Larsen is looking to bid for 1.8 trillion rupees ($28 billion) of orders over the next three years, or almost half of the projects Modi has approved since coming to power in 2014.

“What we have done over the last 30 years is going to get us into the real big league now,” Patil said. “It is going to be a golden goose.” Larsen, which started setting up facilities to make defense equipment 30 years ago, may be benefiting from an early mover advantage in a market that saw the arrival of competitors over the years since. Billionaire Anil Ambani’s warship builder Reliance Defence and Engineering Ltd., and conglomerates including the Tata Group and Mahindra & Mahindra Ltd. are also seeking a slice of the contracts.

Larsen & Toubro Limited