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Privatisation of one of the four State-run defence shipyards on government’s radar

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NEW DELHI : The government is weighing a suggestion by a top global management consulting firm to privatise one of the four state-owned defence shipbuilding yards in the country, a government official aware of the discussion has said.

India has four defence shipyards – Mazagon Dock Shipbuilders Ltd (MDL), Garden Reach Shipbuilders and Engineers Ltd (GRSE), Hindustan Shipyard Ltd (HSL) and Goa Shipyard Ltd (GSL) – all operating under the administrative control of the Ministry of Defence. Of these, Mazagon Dock Shipbuilders and Garden Reach Shipbuilders and Engineers are listed on the stock exchange.

“Boston Consulting Group has recommended in a report that one of the four defence shipyards could be considered for privatisation,” the government official said, asking not to be named because he is not authorised to speak to the media.

The BCG suggestion is being discussed within the government and the matter has generated much heat with conflicting views from the Indian Navy and the defence yards who are said to be opposed to the idea, the official said.

The defence sector is classified as a strategic sector under the “New Public Enterprise Policy for Atmanirbhar Bharat’ finalised by the Cabinet in February 2021.

“In strategic sectors, bare minimum presence of existing public sector commercial enterprises at holding company level will be retained under government control. The remaining enterprises in a strategic sector will be considered for privatisation or merger or subsidiarisation with another PSE or for closure,” the policy stated.

“What BCG is saying is that in a strategic sector where there is a mandatory requirement to hold on to the government, you don’t need so many shipyards. So, the government might even consider X, Y or Z for privatisation,” the official mentioned earlier said.

“If the government thinks that a particular defence PSU yard is doing very well and, hence, can be sold very easily, it can think in terms of those (privatisation) lines,” the official said.

“And it is not that defence shipbuilding in India will come to a grinding halt with the privatisation of a defence shipyard. Maybe, let’s say, someone like L&T buys it and takes it to newer heights,” he added.

With the government lining up defence deals, including submarines, worth billions of dollars at State-run defence shipyards, a potential sale of one of the four shipbuilding companies, would generate huge interest among the private sector.

The Defence Ministry and the BCG could not be reached immediately for comments.

Source : ET Infra

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