Friday, April 1, 2016

Boost for DPSUs: Govt plans to increase defence exports

Defence Minister Parrikar
IN A major boost for defence PSUs, Defence Minister Manohar Parrikar on March 30 said that the government aimed at increasing the exports of defence equipment by three to four times in five to seven years. He said this while speaking to the media on the sidelines of the DefExpo in Goa. With this objective, the Defence Research and Development Organisation (DRDO) and the defence public sector undertakings (DPSUs) participated in the expo in full strength.
Parrikar said the new defence procurement policy (DPP) would permit...
the defence PSUs to export up to 10 per cent of the production. This is likely to perk up Modi’s Make in India initiative.
As exports generate higher revenue, the profits would be ploughed back for improving supply to the armed forces. Export from the DPSUs would be subject to clearances from the partner concerns and the Ministry of External Affairs. Parrikar said the value of defence exports was expected to cross Rs 2,000 crore this year. DRDO had booked the largest area in the exhibition, which included indoor and outdoor display. This year the design theme of the DRDO pavilion was “rise of futurism”. Its vision is to make India prosperous by establishing a world-class science and technology base and provide the defence services a decisive edge by equipping them with internationally competitive systems and solutions.
The DPSUs Bharat Dynamics Limited (BDL), Bharat Earth Movers Limited (BEML), Bharat Electronics Limited (BEL), BrahMos Aerospace, Hindustan Aeronautics Limited (HAL), Mazagaon Dock Shipbuilders Limited, Mishra Dhatu Nigam Limited, and Ordinance Factory Board showcased their latest products and cutting edge technologies.
However, though these PSUs including Hindustan Aeronautics Ltd, Bharat Electronics Ltd, Bharat Dynamics Ltd and Mishra Dhatu Nigam Limited (MIDHANI) are enjoying virtual monopoly in defence aerospace sector. However, their profits over the years came not from their businesses rather from huge advances they take from the military against future deliveries, earn interest on them, and show them as profits. Then they award a significant part of the so-called profit to their majority shareholder, the government.
Thus, HAL is an engineering PSU in the aerospace sector and obviously, its profits by and large should come from manufacturing and sale of aeronautical products and allied services in MRO. However, over the years. A major chunk of its profits came not from sales of manufacturing units.
With over 10,000 employees, BDL is a Navratna DPSU since June 2007 and has nine production units and 31 manufacturing divisions. It produces electronic warfare systems, avionics components etc. for aircraft.
A manufacturing base for guided weapons systems, BDL has been the prime production agency for the Integrated Guided Missile Development Programme.
MIDHANI is equipped for metallurgical facilities to make super-alloys, titanium, special purpose steels etc. for aerospace, defence, atomic energy etc. There is an increase in sales revenue of the PSU and net profit. The profitability of MIDHANI like other DPSUs has a significant contribution of other income generated by the interest accrued on advances received from its customers.

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