The Centre is considering a plan to help the Central Public Sector Undertakings (CPSUs), including those of them incurring losses, set up subsidiaries or form joint ventures with State-owned enterprises (SOEs) in poor African countries.
The proposal has been moved by the department of public enterprises (DPE) of the heavy industries and public enterprises (HI & PE) ministry, and is currently being considered by the Ministry of External Affairs (MEA), official sources told The Hindu.
The DPE wants the MEA to influence African countries, especially those with hardly any private capital investment currently, to replicate the ‘Nehruvian’ post-independence period industrial policy of India that heavily favoured SOEs.
For such a policy, the DPE, as per its proposal, wants these African countries to reserve several sectors for SOEs so that these CPSEs can operate in a near monopolistic environment for about 15-20 years, the sources said.
“The African countries will have to make policies conducive for the PSUs to operate. Private companies tend to not take the risk of investing in unstable economies such as those in Africa. So PSUs, with the help of African governments, can take the lead in investments and the private sector can then follow,” an official, who did not wish to be named, said.
Once the industrial activity picks up following such huge investments by the public sector, those African governments, like India, can slowly start liberalising such a regime and attract private sector investment, they added.
If the plan becomes a reality, many of the CPSUs, currently struggling in India due to competition from far more nimble and efficient private sector companies, can get a new lease of life and turn profitable, they said.
The idea took shape when the Minister of State HI & PE G. M. Siddeshwara visited African countries including Malawi, Zambia, Nigeria and Liberia in September. The minister travelled as the special envoy of Prime Minister Narendra Modi as part of preparations for the recently concluded India-Africa Forum Summit in New Delhi.
According to the sources, though the DPE had written to the MEA asking the latter to include a ‘special session’ during the Summit on opportunities and challenges for Indian PSUs in poor African countries, the MEA had demurred citing difficulties in scheduling as most of the arrangements had been almost completed.
The new plan is to ask the MEA to convene a special meeting of all the African high commissioners / senior diplomats stationed in Delhi and elicit their views on the strategy. On its part, the HI & PE ministry will shortly call a meeting of CPSUs to discuss the idea.
The development comes even as the Centre has identified 58 loss-making PSUs for either reviving or closing them down, and has been holding inter-ministerial consultations to chalk out a viable strategy. It is also planning to raise Rs.69,500 crore from disinvestment of PSUs this year.
Africa is not entirely a new playing ground for Indian PSUs, especially for those in the energy sector. Indian private companies including Bharti Airtel and the Tata Group also have their presence in several African countries. However, India is far behind China in this game. China-Africa trade has surpassed $200 billion, and is almost thrice as large as the about $70 billion for India-Africa trade. By 2020, China aims to double its trade with Africa to $400 billion and increase direct investment to $100 billion.
W. P. S Sidhu, Non-Resident Senior Fellow (Foreign Policy), Brookings India said: “I would caution against approaching all the 54 African countries in the same manner. Some such as South Africa are inclined towards capitalism, but others like Zimbabwe are strongly socialist. Then there are countries where there is a mix of both.”
Mr. Sidhu said Africa presents a great potential that neither the PSUs nor the private sector firms can take advantage of on their own, and therefore will have to work together. In areas such as railways, oil and gas and heavy industries, the public sector has an edge, he said.
In sectors such as aviation and telecom, the public sector could take the lead, he said.
