Cabinet issues guidlines for DPSU JV’s

New Delhi: The Union Cabinet today approved the guidelines for establishing Joint Venture Companies by Defence Public Sector Undertakings (DPSUs). The guidelines are expected to streamline, while creating a 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 guidelines are also expected to create fairness and transparency in the selection of the JV partner.

Other obectives of the guidelines are to ensure a well defined nature and scope of the JV; retention of the affirmative right of DPSU 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; and Regular reporting and monitoring of the functioning of the JV Company.

A Board-managed DPSU’s will take decisions on the JV formation while adhering to framework of the JV guidelines.

The guidelines have been formed under the Defence Production Policy formulated in January 2011. The aim of the policy was 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.