Shortage of semiconductor chips, delayed approval in key projects, talent retention and procurement through Government e-Marketplace (GeM) are some of the challenges being faced by India’s Defence Public Sector Undertakings (DPSUs) amid push for self-reliance in the sector, a parliamentary panel has noted.
The standing committee on defence, in one of its latest reports, noted that while the first two comprises the major challenges which Bharat Electronics Limited (BEL) is facing, the others, along with enhancing of exports, are among Bharat Earth Movers Limited (BEML’s) major challenges.
Similarly, the roadblocks faced by the Hindustan Aeronautics Limited (HAL) include getting supporting platforms for up to 40 to 50 years or even beyond, which is expensive, extensive testing and economy of scale—implying adequate orders to break even—and competition from established players in the export market.
Other challenges faced by the Hindustan Shipyard Limited (HSL), Mishra Dhatu Nigam Limited (MIDHANI) and Bharat Dynamics Limited (BDL) include idling of submarine refit facilities since the last two years, carrying forward legacy liabilities including negative net worth, volatility in price of imported input raw material volatile and limited availability, pending permission from the Foreign Original Equipment Manufacturers (OEMs) to export missiles.
A delay in projected timelines due to Covid-19 has also added to the challenges of the DPSUs in the last two years.
A senior official of the defence ministry told the parliamentary panel that the impact of the pandemic was not just there in factory premises, but it also brought problems in supply chains with most of the companies being system integrators.
The panel has recommended that urgent and intensive focused efforts from the ministry and the DPSUs are required to ensure that the latter, besides fulfilling the requirements of the Armed forces, are able to achieve their targeted level of production and profits.
The committee also suggested that the defence ministry and the DPSUs initiate concrete measures to address and resolve each of the bottlenecks the DPSUs are facing and also let the panel know the outcomes within the next three months.
Disinvestment of DPSUs
As reported last week by News18, barring HSL, which registered a loss of Rs 14 crore due to lack of submarine refit orders, all other DPSUs had registered a profit in the financial year 2020-21.
As far as disinvestment of DPSUs is concerned, the panel was told that BEML is in the final stage of disinvestment. The panel noted that DPSUs are investing considerable amount in Research & Development, possess both core and non-core assets and many of them are registering profits over the last few years. The report said DPSUs are putting emphasis on product expansion, investment in cutting edge technologies and increasing competitiveness in terms of cost and quality.
The panel recommended that while pursuing the policy of strategic disinvestment, the ministry should address concerns pertaining to protection of national interest, DPSUs’ future, comparison of disinvestment proceeds vis-à-vis its profitability and employee welfare.
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