India’s top developer is betting on a $1.5 billion return from the EV push


(Bloomberg) — The engineering services arm of Larsen & Toubro Ltd. is ramping up investments in self-driving and electric vehicle technologies as a source of knowledge for global manufacturers looking to expand in the Indian market.

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L&T Technology Services Ltd., whose clients include BMW AG and Airbus SE, wants to accelerate growth after posting $1 billion in sales through March, Chief Executive Officer Amit Chadha said in an interview. The company, which is India’s largest construction company, now expects to generate $1.5 billion in revenue over the next two years.

The company has set up design and engineering facilities in Bengaluru, Munich, and Peoria, Illinois, in India over the past three years for autonomous and EV technologies to be closer to vehicle makers. As customers in the technology, telecom and construction industries struggle with economic slowdowns and high inflation, manufacturers of next-generation vehicles are benefiting from a shift from older technologies to environmentally friendly alternatives.

“We’re going out,” Chadha said. “A significant part of our growth now comes from electric autonomous vehicles – not just cars, but also buses, trucks and hybrid aircraft.”

The company is open to hiring specialized engineers to help customers design more efficient battery management systems and EV chargers. It will also develop artificial intelligence systems that will help autonomous vehicles learn to recognize objects on the road.

Global companies have been relying on Indian talent for basic technology outsourcing, and the country is emerging as a powerhouse in advanced operations. It is currently the leading outsourcing of engineering research and development, and the $40 billion market accounts for one-third of the global total, according to a KPMG report.

Still, the South Asian country will not be immune from global headwinds, said Apurva Prasad, vice-president, HDFC Securities. “If global R&D costs decrease, the demand for engineering services will inevitably decrease,” he said.

Besides betting on the transport segment, L&T Technology Services is also investing in areas such as medtech, 5G and sustainability, Chadha said. “The biggest risk I lose sleep over is the risk of becoming irrelevant in the technology world,” he said. “As long as we’re relevant, you’re going to continue to see growth.”

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