Power Pack: Tata group companies are positioning themselves to gain greater territory in the defence equipment market (Illustration: Kishore Das)

“We, as a group, have all the ingredients of becoming a force to reckon with in 10 years,” says V.S. Noronha, head of defence business at Tata Motors, which is trying to advance from being a supplier of logistics vehicles to a manufacturer of armoured and artillery vehicles for the Indian Army.

No Kite-Flying This: Ratan Tata is laying the foundations of a military industrial complex, which may one day rival Lockheed Martin or BAE Systems (Hemant Mishra)

Ratan Tata, however, clearly does not share these concerns. He is pressing ahead with indigenous development and international tie-ups to build capabilities to cater to not only the Indian government’s needs but also for exports. Tata Motors has developed an indigenous light specialist vehicle (LSV) that is currently being tested by the Indian Army, which has evinced interest from a couple of South-East Asian countries, too. The Tata Group is also trying to enter the aerospace area through manufacturing tie-ups for initially low-tech activities — making floor boards for Boeing’s Dreamliner passenger aircraft and cabins for Sikorsky’s S-92 troop transport helicopter.

Behind The Lines
Though Tata Group companies have been in the defence production business for decades — Tata Motors has been supplying logistics vehicles and Tata Power handles defence electronics — it was in 2006, the year the government decided to allow private Indian companies to become prime contractors in defence projects, that Ratan Tata made the first moves towards the creation of his military industrial complex. Tata Advanced Systems (TAS) was created as a dedicated defence company completely owned by Tata Industries, one of the group’s key holding companies. TAS was conceived as the umbrella company for the group’s defence business. It assures the government of its complete Indian-ness for participation in key defence projects. Importantly, Ratan Tata is directly involved in its affairs. The company has signed up with Europe’s EADS to bid for a $1-billion contract to provide tactical communication systems (TCS) to the Indian Army and with America’s Sikorsky Aircraft for making cabins for the S-92 helicopters. It has also signed an agreement with Israel Aerospace Industries for developing, producing and supporting missiles, unmanned aerial vehicles (UAVs), and radars and electronic warfare systems. TAS is also talking with Israel’s Urban Aeronautics to first market and then manufacture the latter’s UAVs, which can take off and land vertically.

Rahul Chaudhary, CEO of Tata Power’s SED, is also eyeing the order for upgrade of the army’s Howitzer guns. “Hopefully, the Howitzer upgrade order will come to private companies,” he says.

Meanwhile, Tata Motors has taken its first step towards becoming a supplier of combat vehicles by developing an indigenous light specialist vehicle (LSV) for the army. Noronha is confident about winning an order for 8,400 vehicles because of the low cost of indigenous components. The company has also developed an eight-wheel drive vehicle for logistics and combat applications. It may be offered to the army as the vehicle to carry Pinaka multi-barrel missiles. Even as the LSV is under trial with the army, the company is trying to solve the problem of upgrading the Indian Army’s legacy tanks and combat vehicles for greater mobility. The tender for these upgrades is due soon.

According to Noronha, the basic hulls of these vehicles still have life, but they lack in power for the current speed required by the Indian Army. For example, the T-72’s power pack — engine and gear box — currently generates only 700 bhp whereas the army wants it perked up to 1,000-1,200 bhp. “Because of our experience in the passenger vehicle business, we have the capability to work out solutions to integrate more powerful power packs into vehicles originally designed for lower power,” he says.

However, Noronha concedes that Tata Motors does not have such power packs in-house and is looking abroad to source the technology. “Once we work out the upgrade solution, we’ll not only offer it to the Indian Army but also to armies around the world, as legacy upgrade is a huge business in the military,” he says.

Mission: Possible
Tata Advanced Material (TAM) is another key cog in the Tata Group’s military machine. For both military and civilian uses, the company produces composite materials for making extremely light yet very resilient items, such as bullet-proof vests and launcher tubes for missiles, among other things. It will supply material to Tata Motors’ subsidiary, TAL Manufacturing Solutions, which will make the floorboards for Boeing’s Dreamliner passenger planes. TAL also has capabilities in research and development and production engineering, and will be assisting Tata Motors in coming up with new, advanced vehicles for the army.

In addition to these key companies, Ratan Tata can also call upon other group companies, such as Nelco, which makes e-fences and explosive detectors.

Even as Tata marches ahead with his military business, there is a concern in some quarters over the emergence of a private military industrial complex in India, akin to the one in the US. According to Laxman Kumar Behera, associate fellow with the Institute for Defence Studies and Analysis in New Delhi, though the Indian private sector at present neither has the technological capabilities nor the excess capacity for military products, once it grows to a significant size, it could start influencing the country’s policies and priorities to suit its needs. “The threat from a military industrial complex cannot be ruled out in the long run as private industry moves on to play a dominant role in the country's security requirements,” he says.

In the US, there is a big debate on whether the country needs to spend big on defence to police the world or does it police the world to absorb all that its military companies develop and manufacture. The US’s defence budget of over $500 billion (Rs 20 lakh crore) exceeds the aggregate defence budget of the next dozen biggest spenders, including the UK, Russia, Japan, France and Germany.

While a lot is still in the realm of possibility, Ratan Tata is betting big on the military business. If he succeeds, he would not only have shaped his own legacy, but also contributed to the creation of a private defence industry in the country.

With inputs from Jayant Singh
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(Businessworld issue 25 - 31 March 2008)