Why India's small step to Mars will be a giant leap for L&T, Godrej

New Delhi: Indian companies that built most of the parts for the country’s recently launched Mars mission are using their low-cost, high-tech expertise in frugal space engineering to compete for global aerospace, defence and nuclear contracts worth billions.

Mangalyaan spacecraft was launched last month and then catapulted from Earth orbit on 1 December, clearing an important hurdle on its 420 million mile journey to Mars and putting it on course to be the first Asian mission to reach the red planet.

[caption id=“attachment_1212071” align=“alignright” width=“380”]  India’s Mars mission. PTI[/caption]

The venture has a price tag of just Rs 450 crore, roughly one-tenth the cost of Maven, NASA’s latest Mars mission. Two-thirds of the parts for the Indian probe and rocket were made by domestic firms like Larsen & Toubro , the country’s largest engineering firm, Godrej & Boyce, and state plane-maker Hindustan Aeronautics Ltd.

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While such companies have a long way to go before they can attract big business in the commercial space sector, years of work on home-grown space projects are helping them carve out a niche as suppliers of precision parts for related sectors like defence, aeronautics and nuclear energy.

Those firms with proven space know-how will find themselves with the advantage as India, the world’s biggest arms importer, shells out $100 billion over a decade to modernise its military with the country favouring local sources.

India in June strengthened a defence policy stipulating that local firms must be considered first for contracts and foreign companies winning contracts worth more than 3 billion rupees must “offset” at least 30 percent of the deal’s value in India.

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“We think over the next two to three years we will be able to convert this into a profit centre,” said S. M. Vaidya, the business head of Godrej’s aerospace division, which made the rocket’s engine and fuel-powered thrusters for the Indian Mars probe.

Thanks to the space work, the company’s engineers now know how to handle the specific metal alloys and the high-precision welding needed for aircraft and missiles as well as rockets, Vaidya added.

Godrej has worked with India’s space agency for almost three decades and in recent years started making engine parts for aircraft makers Boeing Co , the Airbus unit of EADS and Israel’s state-owned Rafael Advanced Defence Systems Ltd. It is in talks with Boeing to make parts for aircraft frames.

HOME-GROWN, GO IT ALONE

India launched its domestic space program 50 years ago and had to develop its own rocket technology after Western powers levied sanctions in response to a 1974 nuclear weapons test, resulting in a “go it alone” development mentality.

The Indian Space Research Organisation, or ISRO, has worked to keep import costs low by designing most of the parts for its programme that are then outsourced to the domestic private sector.

ISRO must still import some metal alloys used in the space programme that it then gives to its contractors and Indian companies also must buy some of the machinery needed to make the parts from Europe and Japan.

India’s heavy reliance on domestic companies for its space programme allows it to tap homegrown technicians and engineers who earn half as much as those in the West. Starting salaries for aerospace engineers in India are at most $2,000 per month, according to Indian recruitment consultancy TeamLease. The same role in the United States brings in about $5,300 on average, according to the National Association of Colleges and Employers.

“The commercial value of the business with ISRO is not high, it is the spin-offs that are valuable,” said M. V. Kotwal, president of the heavy engineering division at Larsen & Toubro, which has made $5.7 million in parts for ISRO in recent years.

L&T has also supplied $240 million worth of parts so far to ITER, an inter-governmental science experiment that is building a thermonuclear reactor in southern France.

Godrej earlier this year won a deal to build a frame for the world’s largest optical telescope in collaboration with University of California, the California Institute of Technology, and the Association of Canadian Universities for Research in Astronomy.

Walchand Nagar Industries , a Pune-headquartered company that made 100 million rupees worth of parts for India’s Mars rocket, said the project helped it win contracts worth double that amount for a state-run nuclear plant in Gujarat.

Reuters