The Aditya Birla Group has decided to enter the defence sector, following at least seven Indian corporate houses that have ventured into the segment and adding heft to the government’s ‘Make in India’ initiative.
The conglomerate with interests from metals to mobile telephony intends to form JVs with US, Israeli and Russian companies to make components for aerospace and combat vehicles, two people with direct knowledge of the plan said.
The Kumar Mangalam Birla controlled group has started exploratory talks with companies such as Lockheed Martin, the world’s largest defence contractor, US helicopter maker Sikorsky and Israel’s Rafael Advanced Defense Systems. The $47 billion group has appointed one of the Big Four global consultants to help them with strategies and identify partners.
The new division will be led by former strategy head Dev Bhattacharya and will soon start hiring to roll out its plan. An Aditya Birla spokeswoman declined to comment on the foray.
Private Indian companies are expanding into defence after the government took several policy measures to encourage the local manufacture of equipment for the country’s armed forces to achieve self-reliance. The steps include allowing foreign direct investment ( FDI) up to 49% in the defence sector and liberalising the licensing regime for Indian manufacturers.
“The Make in India focus, coupled with the easing of defence manufacturing and exports, is making a compelling a case for large Indian business houses to foray into this sector,” said Ankur Gupta, vicepresident, defence, at EY. “The private sector’s belief now needs to be crystallised by the ministry of defence through long-term sustainable orders and the companies themselves forging global supply chain partnerships.”