Tatas, M&M, Ashok Leyland eye Rs. 10,000-cr defence deals

Manu P Toms,

 Hindustan Times Mumbai, January 14, 2014

Procurement of armoured and specialist vehicles by the defence department has opened up a Rs. 10,000-crore opportunity for vehicle manufacturers. While private companies including Tata Motors, Mahindra & Mahindra, Asia Motor Works (AMW) and Ashok Leyland are eyeing a slice of the pie, global defence vehicle suppliers and public sector company Bharat Earth Movers Ltd (BEML) are also bidding for some of the contracts, industry sources said. 

The trials, shortlisting, selection and supply of vehicles would likely take three to four years.

While Tata Motors, Mahindra & Mahindra and AMW will bid for the Army order for 1,200 units of light armoured multipurpose vehicle (LAM), Ashok Leyland will also participate in a tender for supply of 3,500 units of light specialist vehicles (LSV). The combined value of both these contracts could be around Rs. 4,000 crore.

Vehicle manufacturers are actively engaged in developing prototypes as the defence ministry may call for request for proposals (RFP) in the first half of this year.

In another defence tender for self-propelled air defence system (SPAD), vendors such as Tata Power and Punj Lloyd will face stiff competition from overseas players. Tata Power will partner with group company Tata Motors for this project.

Meanwhile, for the tender for procurement of 1,227 heavy trucks for Pinaka multi-barrel rocket launchers, Bharat Earth Movers Ltd has emerged as the front runner, sources said. Both these contracts together would be worth aroundRs. 6,000 crore.

“These are the major defence contracts for automobile manufacturers that are on the horizon. But nobody knows how they will shape up. Elections and government’s financial constraints may cause uncertainties,” a top executive with a vehicle manufacturing company said.

Besides these contracts, a possible revival of the `60,000-crore futuristic inventory combat vehicle (FICV) segment make the defence sector an interesting battle ground for automobile manufacturers.