L&T plans to step up defence equipment exports to Southeast Asia

COIMBATORE: Larsen & Toubro plans to step up export of defence equipment to Southeast Asian countries and is hopeful of bagging a deal soon in Vietnam, even as the engineering conglomerate sees its domestic order book for defence equipment reach Rs 50,000 crore in three years, a top official said.

"L&T has potential for Rs 4.5 lakh crore for defence orders over the next decade and typically we should get more than half of it," said Jayant D Patil, head of defence and aerospace at L&T. "In the short term, we hope to book orders worth Rs 20,000 crore in the next 12-18 months," he told ET.

L&T pegs potential of the Indian defence market at Rs 1.5 lakh crore by 2021 and Rs 4.5 lakh crore by 2026, driven by the current government's thrust on local sourcing.

The company is currently manufacturing and supplying different components for missiles to Indian armed forces and has the capability to make missile.

To meet the country's growing demand for defence equipment locally, L&T invested heavily in a port-cum-shipyard unit that is capable of building submarines. It also set up a nuclear forging unit.

These new businesses are yet to see the orders that justifies the investment and like L&T's other fledgling business of power equipment they continue to be a drag on the company. But L&T is upbeat on the defence sector, thanks to the central government's policy and proactive stance. Patil said that there is also $3-billion export opportunity for Indian defence equipment makers to tap in Southeast Asia.

He said the firm is in talks with the government to smoothen the process and offer financing to these countries. "We bid for projects earlier and lost because Chinese makers also offered low-rate financing. This is a big challenge because the capital cost in India is high and we can't, on our own, offer low rates," Patil said. "This will help India achieve exports target as well."

L&T is close to bagging a project to supply interceptor boats in Vietnam. These boats were developed by it in-house after the government ordered a series of offshore patrol vessels and interceptor boats in response to the terrorist attack on Mumbai in 2008, when the gunmen entered the city through sea.

(The reporter visited L&T's plant on the company's invitation)