Defence public sector undertaking
Also called: DPSU, BDL, HAL, BEL · Topic: Industrial Policy, Public Sector, MSMEs and Disinvestment · NCERT: Beyond NCERT
Meaning
A defence public sector undertaking (DPSU) is a government-owned company that makes defence equipment for the armed forces. Examples are missiles, aircraft and electronics. Most DPSUs are central public sector enterprises (CPSEs), meaning the Centre holds at least 51% of the shares. They often build weapons designed by DRDO, the government's defence research body. Under IPR 1948, arms and ammunition were a state monopoly, so for decades the state made almost all of India's weapons. After 1991 defence production was opened to private firms. However, electronic aerospace and defence equipment still needs a compulsory industrial licence (government permission to produce). DPSUs matter because they help India make its own weapons and import fewer of them.
Example
DRDO's lab at Hyderabad designed the Pralay missile, and Bharat Dynamics Ltd (BDL) will produce it. BDL works as a Development-cum-Production Partner: it joins during development so that it can start production quickly once the forces accept the missile. Hindustan Aeronautics Ltd (HAL) was earlier a Navratna and became a Maharatna in October 2024. That status gives its board more freedom to invest, up to Rs 5,000 crore or 15% of net worth for each project.
Don't confuse with
- DRDO: a government research organisation that designs weapons. It is not a company and does not mass-produce them, which is the DPSU's job.
- Public-sector reservation: defence production is not reserved for DPSUs. Only atomic energy (specified activities) and railway operations are reserved for the state today.