New Delhi: The Heavy Industries Ministry is likely to seek approval of the Cabinet for “strategic disinvestment” of loss making auto maker Scooters India, a top official said on Friday.
Strategic disinvestment denotes sale of substantial portion of government shareholding in identified central public sector enterprises up to 50 per cent or more, along with transfer of management control.
“Scooters India (disinvestment) is in the process. It will be a strategic sale. Strategic disinvestment, I would say,” Heavy Industries Secretary Girish Shankar told PTI.
There have been talks about disinvestment of Scooters India in the past but successive governments could not implement the plan due to divergent views among various stakeholders including employees.
Despite the government’s revival attempts including sanctioning a “financial package”, Scooters India continued to incur losses over a long period and eventually was declared “sick”.
The disinvestment in Scooters India is part of the government’s larger plans of strategic stake sale in central public sector enterprises (CPSEs).
The company used to manufacture the popular Lambretta scooters.
Government think tank NITI Aayog had recently submitted two separate lists of sick and loss-making PSUs – one comprising those that can be closed down and the other of those where government can divest its stake.
The government aims to collect Rs 56,500 crore through disinvestment in PSUs this fiscal year.
Of the total budgeted proceeds, Rs 36,000 crore is estimated to come from minority stake sale in PSUs and the remaining Rs 20,500 crore from strategic sale in both profit and loss-making companies.
In 2015-16, the government raised less than half of the disinvestment estimates at Rs 25,312 crore against the target of Rs 69,500 crore.
It had raised around Rs 24,500 crore in 2014-15 by selling stake in public companies, about Rs 16,000 crore in 2013-14 and Rs 23,960 crore in 2012-13.
Besides, Mr Shankar said it is expected that Indian passenger car market will reach 4 billion units by 2020, up from 1.97 million right now.
He said the automobile sector has the potential to generate up to $300 billion in annual revenue by 2026, create additional 65 million jobs and contribute 12 per cent to country’s gross domestic product.
The secretary was addressing a CII event here.
NITI Aayog CEO Amitabh Kant said India must become an integral part of the global supply chain to realize its ambition of 9 to 10 per cent growth in the coming decades.