On Monday, the Union government gave an in-principle green signal to divesting 10% of its stake in Hindustan Aeronautics Ltd, or HAL,.
This is perhaps one of the more far-reaching stake-sale plans by the government. What is important is how the process is completed.
There is no doubt that HAL’s technological abilities are limited when compared with the demands of the Indian Air Force (IAF). It is no secret that this equation is uneasy at times.
If the aim is to give a technological boost to HAL, it is best that a large chunk of equity be offered to a partner in a strategic sale instead of frittering it away in a public offering. Inflows of technology and good management practices are more likely that way.
This is an option that should be considered seriously as in the years ahead, the requirements of IAF are only going to rise and so will the demands made on HAL.