Guide­lines for es­tab­lish­ing joint ven­ture com­pa­nies by DPSUS

SP's NavalForces - - WARSHIP -

The Union Cab­i­net on Fe­bru­ary 9, 2012, ap­proved the guide­lines for es­tab­lish­ing joint ven­ture (JV) com­pa­nies by de­fence pub­lic sec­tor un­der­tak­ings (DPSUs). Salient fea­tures of the JV Guide­lines con­tain pro­vi­sions for the fol­low­ing im­por­tant mat­ters that are crit­i­cal from a na­tional se­cu­rity per­spec­tive: En­hanc­ing fair­ness and trans­parency in the se­lec­tion of the JV part­ner. En­sur­ing a well-de­fined na­ture and scope of the JV. Re­ten­tion of the af­fir­ma­tive right of DPSUs 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 JVs/sub­sidiaries. Exit pro­vi­sions for the DPSU. Reg­u­lar re­port­ing and mon­i­tor­ing of the func­tion­ing of the JV com­pany. The JV guide­lines will pro­vide a stream­lined, fair and trans­par­ent frame­work for en­ter­ing into JVs by DPSUs, with the ul­ti­mate ob­jec­tive of bet­ter risk-man­age­ment, greater ef­fi­ciency, shorter time frames for de­liv­ery to meet the in­creas­ing de­mands of our armed forces, and for en­hanc­ing self-re­liance in the de­fence sec­tor as a whole. The for­ma­tion of JVs will hence­forth be un­der­taken by Board-man­aged DPSUs within the frame­work of the JV guide­lines.


With the ob­jec­tive of achiev­ing sub­stan­tive self-re­liance in de­fence pro­duc­tion, the Min­istry of De­fence had is­sued the De­fence Pro­duc­tion Pol­icy in Jan­uary 2011 with the ap­proval of the De­fence Ac­qui­si­tion Coun­cil. In or­der to syn­er­gise and en­hance the na­tional com­pe­tence in pro­duc­ing state-of-the-art de­fence prod­ucts in a glob­ally com­pet­i­tive man­ner, the pol­icy al­lows for adoption of all vi­able ap­proaches such as for­ma­tion of con­sor­tia, joint ven­tures and pub­lic pri­vate part­ner­ships within the gov­ern­ment ap­proved frame­work.

With the ob­jec­tive of mak­ing the pub­lic sec­tor more ef­fi­cient and com­pet­i­tive, the Depart­ment of Pub­lic En­ter­prises (DPE) has granted en­hanced au­ton­omy and del­e­ga­tion of pow­ers for for­ma­tion of JVs and sub­sidiaries by profit-mak­ing Navaratna and Mini­ratna pub­lic sec­tor en­ter­prises (PSEs) and for for­ma­tion of tech­nol­ogy JVs and strate­gic al­liances by Navartna PSEs.

In or­der to fur­ther bol­ster the DPE guide­lines, with the ap­proval of the Cab­i­net, the Min­istry of De­fence will is­sue the JV guide­lines, in or­der 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 that can fur­ther the ob­jec­tive of achiev­ing sub­stan­tive self-re­liance in de­fence sec­tor.

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