Larsen & Toubro has been awarded a supply order by the Corps of Electronics and Mechanical Engineers (EME) of the Indian Army for the overhaul, upgrade and obsolescence management of the indigenous Pinaka Multi-Rocket Launcher Systems. This partnership represents a groundbreaking public-private collaboration in defense sustenance and lifecycle support.

Contract Details and Scope

The comprehensive partnership encompasses several critical areas:

Implementation Strategy

The programme focuses on managing outdated components, upgrading critical sub-systems and providing sustained technical support to Army Base Workshops. Under this initiative, 510 Army Base Workshop (ABW) EME will undertake overhaul and upgrade of critical electronics and systems, utilizing extensive domain knowledge inherent in Army Base Workshop.

L&T, as the Original Equipment Manufacturer, will supply critical spares and support modernization of sub-systems, enabling a shift from conventional maintenance practices to a structured, lifecycle-based sustenance and upgrade framework.

Phased Execution Plan

The implementation follows a structured approach:

Strategic Significance

This unique partnership between a domestic private OEM and the Indian Army represents a significant step for product lifecycle support of Made-in-India artillery systems. The collaboration aims to enhance long-term operational availability and modernization of Pinaka regiments currently in service.

The model is expected to serve as a blueprint for similar lifecycle management and upgrade programmes across other defense platforms, strengthening India's self-reliant defense ecosystem. This approach aligns with the Aatmanirbhar Bharat vision by leveraging indigenous design, manufacturing and systems integration capabilities.

Larsen & Toubro 's Chief Financial Officer R Shankar Raman has expressed optimism about government capital expenditure in the upcoming budget, anticipating a 10% increase for FY27. Speaking on infrastructure investment priorities, Raman emphasized the critical role of government spending in supporting India's development goals while addressing concerns about private sector investment dynamics.

Budget Expectations and Infrastructure Focus

Raman expects the government to maintain its infrastructure investment momentum, building on the substantial allocation in the current fiscal year. His projections are based on India's long-term development objectives and the government's continued commitment to infrastructure growth.

"If India is to become a developed economy by 2047, infrastructure has a lot of role to play, and I think the government is seized of this. I am hopeful that they will allocate adequate resources in the budget to be able to do that," Raman stated.

Project Execution and Quality Concerns

The CFO highlighted significant challenges in project execution, particularly regarding contractor selection processes. He noted that awarding projects to the lowest bidder often leads to execution delays when contractors lack adequate technical capabilities. However, Raman welcomed recent government recommendations for departments to adopt qualitative-based pricing mechanisms.

Under the new approach, weightage is given to factors beyond cost, including:

• Timely project completion capabilities
• Technical expertise and track record
• Overall execution quality

Raman emphasized that maintaining balance between pricing and execution capabilities will help ensure qualified companies secure contracts, ultimately improving project outcomes.

Manpower Challenges in Construction Sector

The construction industry continues to face persistent manpower shortages, a challenge Larsen & Toubro has been highlighting consistently. Raman identified several factors contributing to this issue:

• Alternative Employment Options: Availability of other job opportunities makes construction less attractive
• Government Employment Schemes: Programs promising up to 125 days of employment discourage workers from relocating
• Pandemic Impact: COVID-19 changed worker mindsets about mobility and proximity to home

Raman suggested that taking projects closer to workers' places of residence could address these challenges, requiring deeper penetration into the country's interior regions.

Private Sector Investment Landscape

Despite concerns about private capital expenditure growth, Raman does not fear resource crowding out due to high government spending. He noted active private sector investments across multiple industries:

• Automobile sector
• Construction equipment
• Steel industry
• Minerals and metals
• Semiconductor manufacturing
• Electronics sector

The CFO praised the government's openness to industry consultation during the budget-making process, calling it a sign of mature governance that considers stakeholder input in policy formulation.

Outlook for Infrastructure Development

Raman observed a significant increase in the conception of large infrastructure projects, noting that "infrastructure has miles to go" in India's development journey. The combination of government commitment, adequate liquidity, and systematic improvements in project allocation processes positions the sector for continued growth, supporting the broader economic development objectives.