India raises USD3.6 billion through sales of defence firms

The Indian government has revealed that it has raised funds worth INR265 billion (USD3.6 billion) over the past five years by selling stakes in six state-owned defence public-sector undertakings (DPSUs).

Minister of State for Defence Shripad Naik said in parliament on 15 March that the divestments have not led to the government relinquishing control of the DPSUs but have been undertaken to “unlock value, promote public ownership, to meet minimum public shareholding norms … and [to] ensure higher degrees of accountability”.

In the past five years, said Naik, the government has divested stakes in Bharat Electronics Limited, worth INR80.7 billion; missile manufacturer Bharat Dynamics Limited (INR23.7 billion); Hindustan Aeronautics Limited (INR141.8 billion); Mazagon Dock Shipbuilders Limited (INR9.7 billion); Midhani (INR4.3 billion); and GRSE (INR4.2 billion).

Naik also confirmed new plans to divest stakes in three DPSUs. He said the government is planning to sell stakes in BEML (formerly Bharat Earth Movers Limited), Garden Reach Shipbuilders and Engineers Limited (GRSE), and defence metals specialist Mishra Dhatu Nigam Limited (Midhani).

He said that timing of these divestments will “depend on market conditions [so] it is not possible to predict a timeline”.

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.

The new share sales mean the only defence firms not to have been subjected to disinvestment include naval shipbuilders Goa Shipyard Limited (GSL) and Hindustan Shipyard Limited (HSL), which have both had financial difficulties in recent years.