India has confirmed plans to sell off additional stakes in three defence firms. The move is line with a new policy to retain a ‘bare minimum’ of interest in state-owned firms operating in strategic sectors including defence.
India’s Minister of State for Defence, Shripad Naik, told Parliament on 8 February that BEML (formerly Bharat Earth Movers Limited), Garden Reach Shipbuilders and Engineers (GRSE), and defence metals specialist Mishra Dhatu Nigam (Midhani) are all “set for divestment”.
The plans involve the selling of stakes worth 26% of equity in BEML and 10% each in Midhani and GRSE. The government currently holds 54% of BEML stock, 74% of Midhani, and 74.5% of GRSE. BEML was listed in the mid-1990s and Midhani and GRSE’s shares were first offered to investors through market listings in 2018 and 2020 respectively.
Naik said that the divestment plans are aligned with the government’s Policy on Strategic Disinvestment, which was issued earlier this month and outlines measures to sell stakes in state-owned firms – otherwise known as public sector undertakings (PSUs) – in sectors including defence to strategic investors rather than share sales through Indian stock exchanges.
Naik added, “The policy of disinvestment of a minority stake without the transfer of management control is being followed for priority sectors including defence PSUs to unlock value, promote public ownership, to meet the minimum public shareholding norms of the SEBI [the Securities and Exchange Board of India], and for ensuring a higher degree of accountability.”
The Policy on Strategic Disinvestment, which was launched alongside India’s 2021/22 budget on 1 February, is aimed primarily at generating revenues for the government from share sales in designated core sectors.
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