Chennai, Aug 11 Larsen & Toubro Ltd expects to benefit from the changes to the defence procurement procedure that will come into effect shortly, with more manufacturing opportunities being thrown up for the private sector.
L&T’s defence business comes under its heavy engineering division, which manufactures and supplies custom engineered equipment and systems to a range of industries such as fertilisers, refinery, petrochemicals, oil and gas, thermal and nuclear power, aerospace and equipment and systems for defence applications.
The Defence Procurement Procedure 2006 made it essential for overseas suppliers to have value addition from within India – or called offsets – for major defence contracts.
The offset stipulation would drive business opportunities in the defence sector in the medium term. DPP-2008 has been announced and will come into effect from September 1.
L&T’s annual report for 2007-08 says DPP-2008 is expected to pave the way towards allowing banking of offsets. This would benefit existing players such as L&T who are licensed to produce defence goods.
The armed forces are considering inducting a variety of weapon systems and engineering systems developed by DRDO.
“This opens up opportunities for the division (Heavy Engineering Division) as it has been a development partner of DRDO,” the annual report says.
The Government’s decision on granting “Raksha Udyog Ratna” status to select technology players is awaited.
The division has registered itself as the preferred player in the private sector for conferring this status.
