Known for taking some ambitious bets over the past decade, some of which have failed to deliver, Ambani's plans to turn Reliance into a major defense company may be one of his boldest yet. It has already bid for 840 billion Indian Rupees ($12.5 billion) in Indian government contracts, senior executives said, though it hasn't yet won any of those.
The success of the strategy will depend partly on whether he can persuade government officials and international partners that he can build sophisticated equipment and partly on whether Prime Minister, Narendra Modi, can get India's notoriously slow procurement process to work.
Modi has made defense a big part of his "Make in India"programme. As part of any defense contract, he is demanding foreign companies tie up with a local partner, transfer technology and move some manufacturing to India.
At stake is $250 billion in defense contracts the government is expected to award over the next 10 years as it looks to upgrade the military's aging equipment.
"We hope to have a significant share of this pie," said R K Dhingra, chief executive of Reliance Defense. He predicted the company will "emerge as a key player in the defense sector over the next few years."
Reliance's ambition is greeted with skepticism by many in the defense world.
An Indian military official involved in defense procurement said Reliance is overreaching in wanting to make everything from ships to planes. Some rivals and potential partners for the contracts said Reliance will struggle to master the manufacture of such a wide range of sophisticated military hardware.
"There is no quick money in this branch," said Jan Widerstrom, head of Saab India Technologies, a unit of Saab AB. "It requires a lot of experience, high tech culture, investments and a long-term business plan."
Still, Saab and Reliance are working together in developing the next generation Combat Management System for the Indian Navy and Coast Guard.
Recently, Reliance's lack of experience and questions about its ability to handle sensitive technology and intellectual property counted against it in its bid to partner with the Russians to build 200 Kamov helicopters, said a Russian diplomat in New Delhi, who declined to be identified in this story because they weren't speaking in an official capacity.
The contract, estimated to be worth a little over $900 million went instead to Indian state-controlled company Hindustan Aeronautics Ltd.
Ambani should identify core areas and concentrate on them rather than "be an inch deep and a mile wide," said Nitin Gokhale, founder of defense website Bharat Shakti.
--reuters--
