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Seeking to give defence public sector undertakings a level playing field in forging partnerships, the government on Wednesday, decided to abolish existing guidelines for establishing joint venture companies by such enterprises.
These guidelines, notified in February 2012, will not be required for separate JV by the DPSUs.
The guidelines issued by the Department of Public Enterprises and the Finance Ministry from time to time, which are applicable to all central public sector enterprises will be applicable for the DPSUs to set up JV companies now.
“This will meet the goal of indigenisation and self-reliance in this sector,” an official statement said after a Cabinet meeting which took the decision.
The abolition of the existing JV guidelines will provide a level playing field between DPSUs and the private sector.
“It will allow DPSUs to forge partnerships in an innovative manner enhancing self-reliance in defence and provide for enhanced accountability and autonomy of DPSUs in ensuring that the process of JV formation is effectively managed by them, so as to secure best outcomes in the interest of national security,” the statement said.
All nine DPSUs — Mazagon Dock Ltd, Goa Shipyard Ltd, Garden Reach Shipbuilders and Engineers Ltd, Hindustan Shipyard Ltd, Bharat Electronics Ltd, Hindustan Aeronautics Ltd, Bharat Earth Movers Ltd, Bharat Dynamics Ltd and Mishra Dhatu Nigam Ltd will be benefited through this decision.
The decision comes against the backdrop of the issues which emerged in the operationalisation of JV guidelines of DPSUs. The Department of Defence Production came to the conclusion that with the increasing participation of the private industry in defence sector and the transformation taking place in the defence acquisition eco system, the requirement of having separate JV guidelines for DPSUs is no longer considered necessary.
“In the emerging scenario with primacy being accorded to indigenous manufacturing / Make in India, it is felt that having multiple set of guidelines may lead to ambiguity and incongruity in the environment,” the statement said.