Govt approves abolition of norms for JV firms by Defence PSUs

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Government today approved the abolition of existing guidelines for establishing joint venture companies by Defence PSUs to meet the goal of indigenous manufacturing.

The decision was taken at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi here.

“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 thereon, 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,” an official statement said.

The guidelines which were notified in February, 2012 will not be required for separate JV by the DPSUs.

“The Guidelines issued by the Department of Public Enterprises (DPE) and Ministry of Finance (MoF) from time to time, which are uniformly applicable to all Central Public Sector Enterprises (CPSEs) will be applicable for the DPSUs to set up JV companies now,” the statement said.

It said the abolition of the existing JV Guidelines will provide a level playing field between DPSUs and the private sector and allow DPSUs to forge partnerships in an innovative manner enhancing self-reliance in defence and provide for enhanced accountability/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.

“All nine DPSUs i.E. Mazagon Dock Limited, Goa Shipyard Limited, Garden Reach Shipbuilders & Engineers Limited, Hindustan Shipyard Limited, Bharat Electronics Limited, Hindustan Aeronautics Limited, Bharat Earth Movers Limited, Bharat Dynamics Limited and Mishra Dhatu Nigam Limited will be benefited through this decision,” the statement said.

The decision comes in the backdrop of the issues which emerged in the operationalisation of JV guidelines of DPSUs.

“The requirement for having separate JV Guidelines for DPSUs has been reviewed in the context of the increasing participation of the private industry in defence sector and the transformation taking place in the defence acquisition eco system,” the statement said.