The Government is selling its stakes in PSUs to raise funds for budget spending and prevent the downfall of the Indian economy.
Now the Modi Government is planning to sell over 15% of its stake in the state-run aerospace and defense company, Hindustan Aeronautics Limited (HAL) through a public offering of shares.
Read on to find out more…
India’s Stake in HAL On Sale!
According to a stock exchange filing on August 26, the Center will sell a stake of about 10%, with an option to sell a further 5% in HAL.
At a floor price of 1,001 rupees per share, the sale could bring in as much as Rs 50.2 billion ($680 million). Retail investors will get a 5% discount on the offer price.
As of Wednesday, the floor price is at a discount of almost 15% to HAL’s closing price of Rs 1,177.60 in Mumbai.
India has been one of the world’s largest defense importer. The Center hopes this will draw investors to the offering.
Why Is India Selling Its Stake In HAL?
This month, India has decided to stop importing more than 100 items amounting to $47 billion over the past 5 years for the armed forces.
The government is planning to purchase weaponry from local manufacturers with a view to increasing local manufacturing probably under the ‘Make in India’ initiative.
India’s Defense Plans!
Earlier the Government had said it plans to induct the native-made Light Combat Aircraft (LCA) from HAL. HAL manufactures not only Tejas, an LCA but also the Su-30MKI under license from Russia’s Sukhoi. It also plans to build a medium-lift helicopter and an unmanned aerial vehicle for the navy.
India is the world’s third-biggest military spender. However, its air force, navy, and army are still equipped with weapons that are largely outdated. By 2022, it is likely to add 2 more squadrons to its 31 squadrons of the Rafale fighter manufactured by Dassault Aviation SA. However, it still needs 9 more squadrons of fighters meaning a total of 42 squadrons of fighters to protect the western and north-eastern borders simultaneously.