InvestorQ : Is it true that the defence ministry is against the privatization of defence players like BEL, BEML, Bharat Dynamics and Mazagon?
vidhya Laxmi made post

Is it true that the defence ministry is against the privatization of defence players like BEL, BEML, Bharat Dynamics and Mazagon?

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sarah Leo answered.
5 months ago
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Even as the Indian government and DIPAM have been quite aggressive on divesting companies, including select defence companies, there has been an objection note from the Ministry of Defence. The ministry of defence of MOD has apparently resisted defence privatization plans too aggressively on national security grounds.

The MOD has written to the prime minister suggesting that all these government-owned defence firms that are currently dealing with defence production must ideally remain under government majority ownership and control. The Defence Ministry specifically noted that private sector defence industry is still young and may not have evolved sufficiently to match up to the needs of the armed forces. This could, in turn, lead to time and cost overruns.

They also flagged the risk that if some of them became private sector monopolies, or even niche monopolies, then it could seriously compromise national security. Among the state-owned defence PSUs, the government intends to cut its stake in Bharat Earth Mover Limited or BEML from 54% to 28%. It has many more such PSU defence plays lined up for sale.

However, the MOD wants to retail total control over companies like Hindustan Aeronautics, BEL, Mishra Dhatu Nigam and Bharat Dynamics due to the absence of any competition and there was no value addition in allowing the private sector in these cases. They are also averse to divesting Mazagon and other shipyards, including Hindustan Shipyards at Visakhapatnam, as they are critical for creating the Blue Water Indian Navy.

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