Larsen & Toubro, India's diversified engineering giant and Europe's largest missile manufacturer, MBDA, signed a pact to manufacture missiles as a part of the `Make In India' program and to meet the expanding requirements of the armed forces.

The 51:49 joint venture will develop missiles of all sorts for the Indian Army, Air Force and the Navy and employ nearly 500 engineers to design anti-tank, anti-ship and anti-aircraft weapons, officials from both companies told reporters in Delhi on Monday.

Prime Minister Narendra Modi has laid fresh emphasis on re-arming forces after nearly a decade of political neglect. Under the umbrella of the `Make in India' policy some of the largest weapons makers have made a beeline to India, the biggest importer of arms in the world. The Indian Army, Navy and Air Force have floated global tenders to buy new artillery pieces, submarines and fighter aircraft and update Soviet era defence equipment such as radars, anti-aircraft batteries and missile systems.

To begin with the L&T-MBDA joint venture will develop a fifth generation anti-tank guided missile, missiles for coastal batteries and high speed target drones. The two companies have worked together since the past six years and MBDA has a 5-decade presence in India's defence procurement.

“The time has come for us to gear up and start manufacturing on the shop floor," A.M. Naik, Group Executive Chairman at Larsen & Toubro, said. “The picture that is emerging in India's defence sector is that we should have a partnership with a global player.''

Larsen & Toubro has 9 units engaged in the manufacture of defence equipment such as hulls for nuclear powered submarines, artillery guns for the infantry, communication equipment for soldiers, missile targeting equipment and ships. Larsen has been a part of India's defence set up since the 1960s when it began fabricating nuclear reactors for the Department of Atomic Energy. Later, L&T diversified into the space sector by making rocket components for Indian Space Research Organization and then started making prototypes of defence equipment for local ordinance factories.

The advent of the Nationalist Bharatiya Janata Party at the Centre has seen a lot of attention being paid to local manufacturing of defence equipment since 2014 and private players such as L&T, the Tatas, Mahindras and Reliance Defence have jumped into the fray to snatch a piece of the defence budget.

Naik said he was hoping defence sales would account for an annual Rs.10,000 crore to Larsen's topline by 2018-19. He was hopeful that the government would place an order worth Rs.4,600 crore for 155 mm Howitzer guns over the next six months