April 2014 | Nithin Rao
The defence connection
The partnership between the Tata group and the Ministry of Defence of the Government of India has benefited the nation with reduced costs and dependence on imports, indigenous innovation, global quality and profitable transfer of technology
India’s borders stand strengthened. Sophisticated weaponry stand ready for protection: armoured amphibious platforms, blast-proof vehicles, unmanned aerial vehicles, multi-barrel rocket launchers, electronic warfare systems and nuclear submarine control centres. All are products of a longstanding public-private partnership between the Tata group and the Ministry of Defence (MoD) of the Government of India.
Keen to reduce dependence on imports and stimulate indigenous innovation in the development of products for the defence sector, the Indian government, over the last decade, has actively urged private sector players to partner public sector undertakings, R&D organisations and defence institutions in profitable public-private partnerships.
A fine example of the public-private partnership model in defence has been that between the Tata group and the MoD — a relationship lasting over 60 years. Stepping up its engagement significantly in recent years, the group has emerged as a trusted and reliable partner for the three wings of the forces — the army, the air force and the navy.
The defence business generated Rs17 billion in turnover for the group in fiscal 2013, and the 14 companies involved in the sector have an order book adding up to over Rs80 billion. Mukund Rajan, brand custodian and chief ethics officer, Tata Sons, and member, Group Executive Council, notes that the group’s defence business will expand by a hefty 40 percent in fiscal 2014. “There is tremendous scope for the Indian private sector to play a much bigger role in defence,” he remarks. “The private sector today has a relatively small percentage share of the total Indian defence spend, and significantly less than in many other countries.”
With expertise in technology and project management and the effective utilisation of a wide range of competencies, the Tata group is well positioned to enter into virtually any area where the MoD wishes to build private sector capabilities, adds Mr Rajan.
The unique strength of the group is that it can provide convergent defence solutions for complex projects thanks to collaboration between various group firms, thus meeting the multiple requirements of defence customers.
Three noteworthy examples of this include:
- System integration by the Tata Power Strategic Engineering Division (SED) on a Tata Motors chassis for the Akash missile system.
- The joint setting up of engineering, tooling, training and assembly operations for an aerostructure project in Hyderabad by Tata Advanced Systems (TASL) and Tata Consultancy Services (TCS).
- Tata Power SED and TCS working together extensively on security applications.
Of the 14 Tata companies involved in a public-private partnership with the defence forces, three account for a substantial part of the group’s presence in the defence space — TASL, Tata Motors and Tata Power SED.
Tata Advanced Systems: the missile specialist
A 100 percent Tata Sons owned company, TASL has signed contracts worth over Rs40 billion and has joint ventures and partnerships with major global players in the defence, aerospace and security domains.
TASL operates India’s largest private sector, integrated, detailed part manufacturing facility for aircrafts and helicopters in a joint venture with Sikorsky. Says Sukaran Singh, director, TASL: “We are the single global source for the assembly of helicopter fuselage for one of the best-selling helicopters, the Sikorsky S-92, used for VVIP transport.” The company has three different units producing globally-competitive products for helicopters and the aerospace sector.
TASL is also the single global source designated for the empennage (tail and tail assembly) and centre wing box structures for Lockheed Martin’s C 130J military transport aircraft. “It shows the kind of confidence that a company like Lockheed Martin has in us by designating us as the single source for a major part,” adds Mr Singh.
Another major area of business for the company is missiles. TASL is the lead integrator for the development and assembly of command and control systems for India’s major missile programmes and it has created a design and development centre for indigenising missile sub-systems and mini-UAVs.
Tata Motors: The mobility partner
A Tata company whose relationship with India’s defence and security forces is synonymous with that of the group is Tata Motors. India’s largest automobile company (subsidiaries include Jaguar Land Rover), with consolidated revenues of almost $35 billion in 2012-13, is strategically moving from the logistics vehicle segment into the combat vehicle segment.
A leading supplier of mobility solutions, it has supplied over 100,000 vehicles to the Indian military and para-military forces thus far.
Tata Motors has partnered the Defence Research and Development Organisation (DRDO), a premier MoD research body, on projects such as the Prahaar missile launcher, the quick deployment communication terminal, the light armoured troop carrier, the bomb disposal van and the wheeled, armoured amphibious platform.
According to Vernon Noronha, vice president, defence and government business, Tata Motors, the defence forces have over the years realised that the company has the capability to indigenise technology and deliver world-class vehicles at realistic costs. “Our strength comes from our R&D facilities in the automobile sector,” explains Mr Noronha. “We got into the bullet-proof and blast-proof business because of our facilities, which helped us to develop this technology.”
In addition to the Indian army, navy, air force and various para-military forces, the company now also supplies to the defence forces of other countries including Sri Lanka, Bangladesh, Nepal and Tanzania, and to UN peace-keeping forces in conflict zones in Africa.
The company showcased two new combat vehicles at the Defexpo 2014 at New Delhi: Kestrel, a wheeled, armoured amphibious platform providing mobility to frontline soldiers in the battle zone with armour protection backed by fire support, and a light-armoured, high-mobility reconnaissance vehicle that will move ahead of armoured columns.
Tata Power SED: The electronics strategist
One of the largest prime contractors in the Indian defence sector, Tata Power SED has partnered the MoD, the armed forces, defence public sector undertakings and the DRDO for more than 40 years. It has executed projects of national importance such as Pinaka, a multi-barrel rocket launcher; the Akash launcher systems for the air force and the army; the integrated guided missile development programme; the Samyukta electronic warfare system; and the Arihant nuclear submarine control centre.
Established as a defence R&D company in 1974, the company evolved into a prime defence contractor in 2006 and is the only Indian private sector company to have won three prime contracts against global competition. The unit recorded a turnover of Rs2.93 billion in fiscal 2013, and has a strong order backlog of Rs27.7 billion. Its R&D spend is more than 10 percent of its turnover.
“The fact that we are an indigenous, defence-focused prime contractor emerged out of our quest for substantive self-reliance,” explains Rahul Chaudhry, CEO, Tata Power SED. “We have the ability to conceive a product and undertake the entire validation process, which allows us to do the design and manufacturing.” A 400-seat R&D centre for defence in Mumbai and a supplementary centre in Bengaluru enable constant R&D and innovation. The unit has adopted a consortium approach with other Tata companies, to pool core competencies and leverage strengths in development, manufacturing and turnkey solutions.
It has emerged as the premier private sector player for strategic electronics with integrated design-to-production capabilities and a proven track record of developing, integrating, installing, commissioning and providing life cycle support.
The Tata group believes in long-term value creation for all its stakeholders, maintaining the highest ethical standards in the conduct of business. “These facets of the group, our long-term orientation and our commitment to ethical conduct, resonate very well with the needs of the defence sector, where there is a high premium placed on partners who have long-term commitment to see products through multiple generations of evolution, and who are committed to the highest standards of ethics,” observes Mr Rajan. “We also believe that we have the ability to invest in innovation and collaborate with the government to co-create and develop new technologies, and support the deployment of new capabilities, making India more self-reliant.”
|Tata firms in the defence sector
Tata group companies have partnered with the defence forces across areas such as: