Two of India’s most aggressive businessmen, the brothers Anil and Mukesh Ambani have established a firm foothold in the defence industry.
Earlier this week, the ADAG Group wrested control of western India based Pipavav Defence in a deal which would cost it INR2400 crore (US$318 million). Pipavav Defence has a strong order book in weapons and platforms and has established several partnerships with international companies. The ADAG Group is led by Anil Ambani and a new group company, Reliance Defence and Aerospace (RDA) will spearhead the group’s entry into the defence sector.
A source familiar with the development told defenseworld.net, “this is a big bang entry, no question about it. The ADAG Group is into telecom, infrastructure and technology; sectors which complement the defence industry. It will take them little time to enter defence verticals such as shipbuilding, C4iSR and aviation.”
RDA has reportedly set its eyes on an Indian MoD project to manufacture helicopters in India. The Indian army and navy have a requirement for hundreds of helicopters and the MoD had recently invited international manufacturers to partner with Indian companies and bid for this multi-billion dollar project.
Previously, another company, Reliance Industries Limited (RIL) led by Mukesh Ambani, the elder brother of Anil Ambani had set up Reliance Aerospace Technologies Pvt. Ltd. An Indian business newspaper which described RIL as a “highly networked and deep-pocketed company”, said it wants to invest US$1 billion over the next 5 years into the defence business.
Reports say that RIL has entered into an agreement with Dassault Aviation to set up a facility to manufacture aero structures and parts of fighter aircraft. With the latter in final talks to secure a US$20 billion deal to sell the Indian MoD 126 Rafale fighter, RIL can expect good returns from its early investment into the defence industry.
Prior to the two Ambani companies entry into the defence sector, a handful of private Indian companies had shown interest in the defence sector. Prominent were Mahindra and Mahindra, L & T, the Tata group and a few small and medium companies.
With the focus of the Indian government shifting from outright buying to manufacturing in India, the entry of big business bodes well for a country where defence manufacturing was dominated by government-owned companies.
An executive of a foreign company told defenseworld.net, “Our biggest problem is finding Indian partners which have the ability to invest big money in manufacturing defence aggregates. Small companies are good for contract manufacturing, but it is the big companies who have the ability to drive investment, set up huge facilities and hire the best talent.”