Privatisation of PSUs threat to sovereignty

The Government of India (GoI) has decided to go ahead with the “strategic sale” to a “strategic partner” of 26% of its present 54% share in the Bharat Earth Movers Ltd (BEML), which produces critical hardware for India’s armed forces (military, for short).

Disinvestment of the GoI shares in public assets originated in during the Congress’ times, but disinvestment of a defence-sector PSU is a first which the BJP-led NDA II government can claim. The strategy behind the sale is questionable, especially since the GoI loses control over policy and production in BEML.

It is a moot question whether India’s sovereignty and security were considered before the decision was taken, despite objections from within the establishment, supported with facts and figures from government sour­ces. But the matter is questionable also from a public angle.

India is a sovereign, democratic Republic. Its sovereignty — territorial, political and economic — is not negotiable and cannot be compromised. If the coin of national strategy is tossed, the Republic can survive only if “sovereignty” and “security” are its two sides. “Security” is provided by the military, which can ensure sovereignty only if both the soldier and his “gun” (military hardware) are Indian.

This is not to suggest that every bit of military hardware has to be Indian, but that policy and production of critical hardware like weapons, weapon systems, equipment and vehicles, and critical expendables like ammunition (“critical items,” hereinafter, to include critical components) should be under the control of the GoI.

Of course, in emergent circumstances or the short-term, imports of critical items may have to be resorted to, but for the middle-term, indigenous production must be geared-up and imports reduced, while for the long-term, 100% indigenous production of critical items should be achieved.

National strategy in consultation with the military should spell out which are critical items, the timeline or targets, and the policy for sovereignty and security through indigenous production of critical items.

Public money was used to build PSUs as public assets for the purpose of indigenous production. It can and has been argued that if Indian corporations produce critical military items in India, it should satisfy the sovereignty issue. Noting that corporations are not under control of governments, this argument is fraught with consequences.

In present times, a corporation may be registered in a particular country (like say an Indian corporation), but acquisitions and mergers are the order of the day, and what started out as an Indian corporation could well be taken over by a foreign business entity, and become subject to its business interests. Thus, whatever little say, if any, that the GoI had in its policy and production would be lost. Such a corporation, if engaged in prod­uction of critical items for India’s defence, can hold the country to ransom, thus setting a price on sovereignty and security.


Indigenisation crucial

Indigenisation of production of critical military items with the GoI’s control over policy and production is thus an integral part of non-negotiable sovereignty and security, and gearing-up defence PSUs and ordnance factories (OFs) is an inescapable part of national strategy. If PSUs are deemed “inefficient” (which is not across the board), the onus of making them “efficient” lies on the GoI. Selling them off, strategically or otherwise, is no solution.

This does not imply that manufacture in India by the private sector is to be abjured. Private sector manufacturing capacity needs to be used to produce sub-critical items which are used by PSUs to produce critical systems, with control over policy and secrecy with the GoI.

At least, insofar as India’s sovereignty and security are linked with its critical military hardware, “Make in India” has to be extended to “Make by India, for India.” Therefore, defence PSUs and OFs which produce the gun are as much a part of India’s defence of sovereignty and security as the soldier.

Loss of government control over policy and production of critical military hardware and expendables by privatisation of PSUs and OFs can’t be anything other than faulty national strategy. Even if it makes business sense to go for “strategic sale” of these public assets to a “strategic partner,” it needs to be emphasised that national strategy is about sovereignty and security and not business profits.

BEML is the first defence PSU up for “strategic sale,” but other PSUs like HAL, BEL, BHEL, BDL, GRSE and MIDHANI, some of them “navratnas,” and some OFs are also in the process of disinvestment or sale.

Sale of defence PSUs will entail enormous and unacceptable loss of infrastructure and land, and more importantly, irreparable loss of trained human reso­urce working for the cause of national pride through self-reliance and indigenisation. It will also create dependence on foreign entities, and amount to a self-goal obviously not in the national interest.

Especially since India is the world’s largest importer of military goods, the GoI would do well to review its national strategy concerning critical items for its military so that India’s sovereignty and security are assured, and drop “strategic sale” of defence PSUs, which will only benefit corporations.

The writer, a retired Major General, is with People’s Union for Civil Liberties