Government Policies on Joint Sector

The government policies on joint sector enterprises in our country are designed to foster collaboration between the public and private sectors, harnessing their respective strengths for mutual benefit. The Central Government has laid down the following guidelines for the ownership and management of joint sector enterprises:

1. Eligible Industries: Joint sector projects are welcome in industries from which the private sector has been excluded. This means that the joint sector is encouraged in sectors where private enterprises are not allowed to operate independently.
    
2. Foreign Participation: If a big business house or a foreign majority company wants to participate in a joint sector project, prior permission of the Central Government is essential. This suggests that foreign collaboration in joint sector enterprises is subject to government approval.
    
3. Equity Ownership: The distribution of equity ownership in joint sector enterprises without foreign collaboration is as follows: Government – 26 percent, Private Enterprise – 25 percent, Investing Public and Financial Institutions – 49 percent. In cases involving foreign collaboration, the ownership pattern is Government – 25 percent, Indian Investor – 20 percent, Foreign Investor – 20 percent, and Investing Public including Financial Institutions – 35 percent.
    
4. Limit on Shareholding: No single party can hold more than 25 percent of shares without prior approval of the Central Government. This restriction is imposed to prevent undue concentration of ownership and to ensure a balanced distribution of power among different partners.
    
5. Decision-making: Strategic or basic policy decisions in joint sector enterprises are made by the board of directors, on which all partners are represented. Tactical or operational decisions are made by the Chief Executive and his team of executives. The government ensures its effective voice in the management and operation of joint sector concerns.
    
6. Role of Chief Executives: Chief Executives in charge of production, marketing, finance, and personnel should have the status of whole-time directors. The Chairman of the Board is expected to integrate the divergent goals of the major partners to formulate policies that align with the overall objectives of the enterprise.
    
7. Composition of the Board: The board of directors may consist of a majority of government nominees, a majority of non-government directors, or directors in proportion to the equity ownership of various partners in the joint sector enterprise. This indicates that the composition of the board can vary based on the ownership structure and representation of partners.