New Indian Guidelines For Defense PSU-Private Sector Partnership

The Indian Government today approved the Defence Ministry guidelines for its public sector units (PSUs) to establish joint ventures with private firms. The Union Cabinet today approved the guidelines for establishing Joint Venture Companies by Defence Public Sector Undertakings (DPSUs). The guidelines contain provisions for important matters that are critical from a national security perspective, an official release said. "The Ministry will issue the guidelines to harness the emerging dynamism of the private sector in India and increasing opportunities to obtain advanced technologies from foreign sources through adoption of appropriate partnership approaches by DPSUs”, media reports quoted the release as saying. As per the guidelines, DPSUs will retain the "affirmative rights" for taking key decisions in the JV company. Retention of the affirmative right of DPSU for prior approval to key JV decisions such as amendments to the articles of association of the JV company, declaration of dividend, sale of substantial assets, and formation of further subsidiaries, the release said. As per the guidelines approved by the Cabinet, the DPSUs will have the "exit" provision in the Joint Venture companies. The formation of JVs will henceforth be undertaken by Board-managed DPSUs within the framework of the JV guidelines and there will be regular reporting and monitoring of the functioning of these companies, the release said. Such JVs were allowed in the Defence Production Policy released last year but they were recently put on hold by the Ministry after the Mazagon Dockyards Limited (MDL) tied up with a private shipyard, which was opposed by its other rival companies.