BEL, BEML gain as Govt abolishes guidelines for JVs by defence PSUs

Bharat Electronics was up 1.4% at Rs 1,235.95 and BEML was up 3.3% at Rs 1,024.25 on the BSE after the Union Cabinet approved abolition of the guidelines for establishing joint venture companies by defence public sector undertakings.

The abolition of the existing guidelines for establishing joint venture companies by defence public sector undertakings (PSUs) will provide a level playing field between defence sector PSUs and the private sector.

It will allow defence sector PSUs to forge partnerships in an innovative manner, enhancing self-reliance in defence and provide for enhanced accountability/autonomy of defence PSUs in ensuring that the process of formation of a joint venture is effectively managed by them so as to secure best outcomes in the interest of national security.

The government said in a statement that the decision was made in the context of the increasing participation of the private industry in defence sector and the transformation taking place in the defence acquisition eco system in the country.

The Department of Defence Production came to the conclusion that with the increasing participation of the private industry in defence sector and the transformation taking place in the defence acquisition eco system, the requirement of having separate guidelines for establishing joint venture companies by defence PSUs is no longer considered necessary.

Bharat Electronics (BEL) makes equipment for the defence sector. The Government of India currently holds 75.02% stake in the company (as per the shareholding pattern as on 30 June 2016.

BEML serves core sectors like defence, rail, power, mining and infrastructure. The Government of India currently holds 54.03% stake in the company (as per the shareholding pattern as on 30 June 2016.

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