Plan to divest government stake in defence PSEs

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The Government plans to divest at least 20 percent of its shares in defence PSEs. It may also sell its stake in Hyderabad-based Bharat Dynamics for the first time. The company makes missiles including the nuclear-capable Agni series.

The proposed divestment is part of the government’s plan to carry out $150 billion modernization of the equipment and weapons system of the Indian Armed Forces. The stake-sale will provide capital and openness for growth and enable defence PSEs to compete with the private sector which has been allowed gradual entry into defence production over the past few years.

Defence Production Secretary A K Gupta (IAS:1981:TN) has reportedly told a foreign wire agency the government would divest as much as 75 percent of its shareholding in Bharat Electronics.

Without giving any time line for divestment, Gupta added that the stake-sale would facilitate transparency, accountability and efficiency. Productivity and production in public sector defence enterprises have suffered a lot because they have no autonomy to spin off their knowledge into producing commercially feasible civil products. Divestment will necessarily involve shareholders’ scrutiny and compel the companies concerned to become more business oriented.

The government is said to be also moving ahead with a long-pending proposal to sell a 10 percent stake in Hindustan Aeronautics, Gupta said.

The other public sector defense enterprises included in the list of divestment are BEML, Mazagon Dock, Goa Shipyard, Garden Reach Shipbuilders & Engineers Ltd., Mishra Dhatu Nigam Ltd. and Hindustan Shipyard. The state controls about 54 percent of BEML, while the other companies are 100 percent government owned.

Written by: M K Shukla (Editor)

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