People's Democracy

No Disinvestment in HAL

The Polit Bureau of the Communist Party of India (Marxist) issued the following statement on September 19, 2011.

THE CPI(M) strongly opposes the decision of the UPA government to disinvest 10 per cent shares in the state-owned defence undertaking Hindustan Aeronautics Limited (HAL). HAL will now become the third defence PSU in which the state has off-loaded stake after Bharat Electronics Limited (BEL) and Bharat Earth Movers Limited (BEML). HAL is not only much larger, it is also more strategic, being the only aircraft manufacturer in the defence sector and the largest in Asia.

The government has already opened up defence manufacturing to the private sector with up to 100 per cent Indian equity and 26 per cent foreign investment, with formal proposals doing the rounds to increase FDI limit to 49 per cent. It is clear the government is succumbing to pressure from corporates who are only looking for substantial and assured profits from a larger share of India’s burgeoning expenditure on defence acquisitions.

The excuse advanced by government that HAL needs funds for modernisation is untenable. With orders having increased by over Rs 8,500 crore, and huge contracts in the pipeline including through 30 per cent offsets of several large defence purchase orders, HAL has numerous other options for raising funds.

The CPI(M) demands the reversal of the HAL divestment, which could well be a precursor to deeper inroads by Indian corporates or even foreign defence majors at a later time. The CPI(M) further demands a roll back of the policy of privatisation of the defence industry and opening it up to foreign participation. These measures will lead to dismantling of India’s hard-won technological self-reliance besides endangering national security.