India is going to start an $11 billion sale of government assets, including holdings in the shipyard and factories that supply India’s military.It will offer investors a share of some of the region’s more profitable manufacturers that are benefiting from soaring defence spending.
Prime Minister Narendra Modi wants to change the status of India as the world’s largest arms importer and reduce the fiscal deficit by raising money.
Among the biggest stakes to be sold are in Hindustan Aeronautics Ltd., or HAL, which is trying to build a domestic fighter, and Cochin Shipyard Ltd., currently building India’s first home-made aircraft carrier.
As India builds its status in the region, “it will find it even more essential that it becomes self-sufficient in designing and manufacturing high-tech weapon systems,” said Deepak Sinha, a consultant with the New Delhi-based Observer Research Foundation. Non-state investors can help make the arms-makers more efficient and focused, he said.
Modi has pledged to spend $250 billion by 2025 on weapons and military equipment for a nation that has territorial disputes with Pakistan and China. India makes about 70 percent of its defence purchases abroad and has topped the Stockholm International Peace Research Institute’s list of the largest defence importers for the last seven years.
India is also asking private equity funds to invest in profitable state-controlled companies such as helicopter maker Pawan Hans Ltd. and BEML Ltd., which makes military and mining vehicles and rail cars.