TATA to Invest $227M in India’s Defense Sector
Press Trust of India reports that the Tata Group has committed to investing Rs 1,000 crore (INR 10 billion, or $227 million at current conversions) for defense-related R&D efforts and corporate capabilities buildup over the next 4-5 years. “The Tata Group aims to achieve this target by exploring the synergies between group companies, leveraging its strength in strategic electronics, IT and communication to meet the needs of the armed forces in an era of digital wars.”
“The investments would not only be made in getting high-quality manpower but also for research and development and infrastructure development,” said M N Bhagwat, Chairman (Strategic Council), Tata Power Strategic Electronics Division. Bhagwat also said the group was also looking for “strategic tie-ups”, including with foreign companies. So, what are their expectations?
The Tata Group expects around Rs 1,100 crore ($250 million at current conversion) this fiscal year in defense-related revenues, and aims to double this to Rs 2,200 crore ($500 million) by the year 2008.
India’s defense sector has significant state ownership, but Tata Industries Director M A Pathan said that as the government looked for more private sector involvement, Tata group will find opportunities. Despite its name, for instance, Bhagwat’s division is pursuing a future contract to upgrade more of India’s Soviet artillery from 130mm to 155mm. Soltam of Israel currently holds that contract. Tata Group is also involved in the long-delayed Pinaka 214mm rocket artillery system project.
The $17.8 billion Tata Group is a very diversified conglomerate. They claim to have started India’s first software venture, and are now Asia’s largest software exporter. The Group has also rolled out India’s first fully indigenous passenger car, is one of the world’s top ten producers of commercial vehicles, the world’s largest tea producer, and the world’s sixth largest manufacturer of watches. Other divisions operate India’s largest 5-star chain of luxury hotels, as well as India’s largest private sector power utility, among others. Member companies like Tata Motors, TCS, Tata Power Strategic Electronics Division, Nelco, Tata Advanced Materials and VSNL all have opportunities to participate in defense-related business.