L&T to ramp up defence play to billion-dollar business

Economic Times

28-05-2025

Larsen & Toubro (L&T) is aiming to create a multi-billion dollar defence business, a sharp rise from `6,185 crore (about $726 million, by current currency values) of orders in the previous fiscal year, enthused by the government's push to upgrade and modernise the military. The engineering conglomerate has a broad presence in the defence sector—manufacturing warships, patrol vessels, armoured vehicles, artillery guns and missile systems, among others.
The Narendra Modi government has set an ambitious target of `30,000-crore worth defence exports this fiscal year, reaching `50,000 crore by FY29. The government is also aiming for domestic defence production of ` 1.6 lakh crore in FY26, nearly doubling to `3 lakh crore by FY29. R Shankar Raman, L&T president and chief financial officer, told ET the defence sector has the potential to be a multi-billion dollar segment. 'It can be as big as you want because it is a question of how much the government is willing,' he said, adding that it is an intrinsic part of L&T's plan to fill its shipyard yard with defence orders, and expand if needed.
'When you talk about defence or Navy, right from coast guard and survey vessels to fast boats to ships, fleets, frigates and submarines, you can go the whole length,' he said, detailing L&T's marine manufacturing capabilities.Shankar Raman noted that the government is realising the criticality of having greater private sector participation in defence to rapidly upgrade India's military hardware, especially considering the combined capacity of all state-run defence firms and their order backlogs.'We are quite glad to hear the government increasingly saying there is a need for the private sector to participate (in defence). The government not only sees it as a domestic requirement but also realises there is an international opportunity, with the kind of defence step-up that is happening and geographies and supply chain getting rearranged,' he said. L&T has a state-of-the-art shipyard capable of building large warships, conventional submarines and critical equipment and systems for these platforms. The business, however, does not manufacture any explosves or ammunition. The company's defence portfolio, which falls under the precision engineering and systems business, secured Rs 13,326 crore worth of orders last fiscal, a 29% growth, mainly due to a repeat order for K9 Vajra-T selfpropelled howitzers. The business earned revenue of Rs 6,185 crore last fiscal, a 32% growth.
L&T was also associated with the design engineering and construction of the INS Arihant, India's first indigenously-designed and built nuclearpowered ballistic missile submarine. Last October, it launched the first of two multipurpose vessels (MPVs) for the Indian Navy from its Kattupalli Shipyard in Chennai. It is also constructing three cadet training ships and six other vessels for the Navy. The conglomerate's bet gains significance in the midst of global defence supply chains facing severe strain due to geopolitical conflicts such as the Russia-Ukraine war, disrupting critical supply routes, especially in eastern Europe, affecting the availability of essential materials and components. 'The US' planned tariff imposition is expected to further strain the supply chain. These actions have increased costs for defence contractors and caused delays in production and maintenance," L&T said in its latest annual report. The company is also focusing on investing in startups to enhance its technology and defence expertise. It has created a Rs 200-crore corpus for startup investments. 'A lot of IITsponsored projects are happening. So, we were willing to invest in such ventures. A lot of startups are in the defence application. We are examining them as to which would help us," said Shankar Raman.He added that L&T could be interested in areas such as launching systems, radars and traction devices. The company is also open to partnering startups in areas of power distribution, load distribution and load management systems.
L&T is also targeting a 20% market share in the nuclear power segment, said Shankar Raman. The government has initiated the Nuclear Energy Mission, allocating Rs 20,000 crore towards research and development, and the deployment of at least five Bharat Small Modular Reactors.