Larsen & Toubro, the Rs 8,000 crore (Rs 80 billion) engineering giant, is scouting for foreign partners for its defence equipment manufacturing business.
The diversified major is in discussions with several European, Russian, Korean and US-based companies for partnerships, company executives said.
The partnerships could be for its proposed foray into manufacturing high-tech equipment for the Indian defence forces and even exports.
L&T is planning a range of products including warships, submarines, weapon platforms (offshore, floating and submerged), artillery, torpedoes, radar and sonar systems and other electronic warfare equipment, small weapons and even armoured vehicles.
The government currently allows up to 26 per cent foreign investment in the defence equipment sector, but subject to government clearance. L&T has industry licenses for four categories of defence products.
PM Mehta, senior vice president - operations told Business Standard, "The nature of foreign partnership or collaboration will be subject to a clearance by the government. Also, the local market for such products is not too big and we will require a clearance for exporting the products manufactured by the JVs."
Mehta said the process of roping in a strategic partner for the business is time-consuming because of the stringent clauses introduced by the foreign players particularly as regards risk-sharing.
The defence equipment business currently accounts for about 25 per cent of L&T's heavy engineering business turnover of Rs 1,000 crore (Rs 10 billion). L&T is planning to raise this proportion to 50 per cent.
"We have diverted our attention towards capturing new export markets. Also, our focus is now more on critical and sophisticated product manufacturing," Mehta added.
Meanwhile, L&T's engineering and construction division reported a 125 per cent growth in its export orders to Rs 2,120 crore (Rs 21.2 billion) for the fiscal 2002-03.
New orders booked by the engineering major for the fiscal amounted to Rs 9,400 crore (Rs 94 billion), up 25 per cent against the previous year.
K Venkataramanan, senior vice president (operations) said, "While the export margins are lower compared with the domestic sales, the idea is to promote the India brand globally.
"The large turnkey orders bagged by us reflects the confidence of the customers on our company in the face of international competition."
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