Govt. scraps separate JV norms for DPSUs

Four years after a Joint Venture (JV) of Mazgaon Docks Limited (MDL) and Pipavav shipyard kicked up a row over the selection of private partners and forced the UPA government to draw up a set of guidelines, the NDA government on Wednesday abandoned them claiming it would provide a level playing field to meet the goal of indigenisation and self-reliance in this sector.

The Union Cabinet chaired by Prime Minister Narendra Modi has approved the abolition of existing “Guidelines for establishing Joint Venture Companies by Defence Public Sector Undertakings (DPSUs),” the government said in a statement on Wednesday.

These guidelines which were notified in February, 2012 will not be required for separate JVs by the DPSUs and the guidelines issued by the Department of Public Enterprises (DPE) and the Ministry of Finance (MoF) from time to time, which are uniformly applicable to all the Central Public Sector Enterprises (CPSEs) will be applicable for the DPSUs to set up JV companies now, the statement said.

The existing guidelines for establishing JVs by the DPSUs were approved by the Cabinet on 9th February, 2012 and the same were notified on February 17, 2012. This was specifically done following a series of protests over proposed JVs by MDL with Pipavav and also Larsen & Toubro and ABG Shipyard. Pipavav shipyard has since been acquired by the Reliance group of Anil Ambani.

Overloaded with orders

The DPSUs are overloaded with orders and the JVs were seen as a route to transfer some of the work to the JV partner. However questions were raised at that time on the basis of selection of the private partner for the JVs.

Following these protests the Defence Ministry initiated a vigilance inquiry to see if the proposed JV was being set up in contravention of the Ministry guidelines.

In the statement on Wednesday, the government noted that the decision came in the backdrop of the issues which emerged in the operationalisation of the JV guidelines of DPSUs. Now, with primacy being accorded to indigenous manufacturing/Make in India, it is felt that having multiple sets of guidelines may lead to ambiguity and incongruity.

Move will provide a level playing field to meet the goal of indigenisation and self-reliance