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Larsen & Toubro Ltd (L&T), India's largest private-sector defense manufacturer by revenue, is looking to ramp up its aerospace division to strengthen its foothold in the country's burgeoning private space sector, a senior executive said on Thursday.

The move follows the government's recent efforts to open its space industry - traditionally led by the Indian Space Research Organisation (ISRO) - to private firms. The success of the Chandrayaan-3 lunar landing and Aditya-L1 solar mission has created new opportunities for companies with advanced engineering capabilities.

"We clearly see an economy growing out there. How fast it will grow and where the contours will be may be hard to predict, but what we can say for sure is that we are going to leverage our 50 years of relationship with ISRO for manufacturing launch vehicles," said AT Ramchandani, senior vice president and head of L&T's Precision Engineering & Systems.

Details of L&T's expansion plans have not yet been made public. With private firms now eligible to design, build, and operate launch services, companies such as L&T are well-positioned to benefit from the growing demand for commercial satellite launches.

India expects its commercial space industry to be worth $44 billion within the decade and is encouraging private companies to invest in the sector.

L&T has long been involved in building key components for Indian missiles, Mars and lunar missions, satellites and artillery.

It is currently manufacturing the Polar Satellite Launch Vehicle (PSLV), a mainstay of ISRO's satellite launch program, through a consortium with Hindustan Aeronautics Limited.

The first launch of the privately built PSLV is due in early 2025, with each rocket costing around 2 billion rupees ($23.8 million), Ramchandani said.

India's plan to privatize its Small Satellite Launch Vehicle (SSLV) program — aimed at providing cost-effective launch solutions for smaller payloads of up to 500 kgs — has also drawn interest from L&T and others.

"The whole idea of SSLV is that you should be able to do about 12 launches in a year. Beyond this, potential exists for scaling up to a launch in every 15 days," Ramchandani said, adding that at about $15,000 per kg, it will be a cost-effective launch choice.

Analysts at Polaris Market Research expect the global space launch services market to grow to $43.94 billion by 2032, up from $13.63 billion in 2022.

Ramchandani did not comment on the projected market size for L&T or the specific investment in the scale-up but said that the company aims to be frugal.

"We have adequate land and aerospace manufacturing facilities already in place. There is a good degree of expertise, which can be further enhanced as required," Ramchandani said.

"Actual investments will depend on how fast the technology matures, how many customers we are able to attract and how efficiently we are able to produce," he added.

L&T's Precision Engineering and Systems (PES) unit posted revenue of 46.10 billion rupees ($548.3 million) in FY2024, up 41% from the previous year. The sprawling conglomerate, with operations across construction, infrastructure and technology, reported a consolidated revenue of 2.21 trillion rupees ($26.29 billion) in the same period.

Shares closed 6% higher a day after the company posted its second-quarter results and maintained its full-year orders forecast.

($1 = 84.0520 Indian rupees)