Reliance and Diehl sign ₹10,000 crore defence pact to manufacture Vulcano precision ammunition in India

Economic Times

a day ago

In a move that could reshape India's defence production landscape, Reliance Defence, a subsidiary of Reliance Infrastructure, has entered into a strategic cooperation agreement with Germany's Diehl Defence. The partnership will focus on the local production of the Vulcano 155mm precision-guided munition system—an advanced artillery shell designed for long-range, high-accuracy strikes.The announcement, made on 10 June, signals a major step forward in India's efforts to reduce dependence on imported defence equipment and build a robust domestic manufacturing base.
The Vulcano 155mm system is no ordinary shell. It uses cutting-edge laser and GPS-guided targeting to deliver pinpoint accuracy. This makes it a valuable asset for the Indian Armed Forces, especially in modern combat scenarios where precision is critical.
Reliance Defence will lead the manufacturing effort as the prime contractor, while Diehl Defence will provide the core technology and system-level expertise. The production will take place at a new greenfield facility in the Watad Industrial Area, Ratnagiri, Maharashtra, which will be part of the Dhirubhai Ambani Defence City (DADC). Reliance Defence estimates that this partnership could generate up to ₹10,000 crore in revenue. This projection reflects the growing demand for advanced ammunition systems and the company's ability to localise critical defence technologies.
The manufacturing initiative will include over 50% indigenous value addition, directly supporting India's defence indigenisation goals. It also aligns with the government's target of achieving ₹50,000 crore in defence exports by 2029.Diehl Defence, headquartered in Überlingen, Germany, is a global leader in defence systems. Its portfolio includes guided missiles, air defence systems, and advanced ammunition. The company employs around 4,500 people and generates annual sales exceeding €2 billion.Helmut Rauch, CEO of Diehl Defence, said, 'Diehl Defence looks forward to strengthen the current relationship with Reliance Group in the context of TGM for the Indian Armed Forces.'This collaboration marks Reliance Group's fourth major international defence partnership, following earlier ventures with Dassault Aviation, Thales Group, and Rheinmetall.Following the announcement, shares of Reliance Infrastructure rose by 3.5%, closing at ₹404.40 on the Bombay Stock Exchange. The market's response reflects investor confidence in the long-term value of this strategic move.
While the Indo-German partnership is being celebrated in New Delhi, reports have surfaced that Diehl Defence is also quietly promoting its IRIS-T air defence system to Pakistan1. The IRIS-T, known for its performance in Ukraine, is capable of intercepting supersonic missiles like Russia's P-800 Oniks—technologically similar to India's BrahMos. Analysts believe Pakistan's interest in the IRIS-T stems from its desire to counter India's BrahMos missile capabilities. This development has raised concerns in strategic circles about Germany's dual-track defence diplomacy in South Asia.