What is joint sector company ?

Joint sector:
Joint sector implies the enterprise owned and managed jointly by the private sector and government/public sector undertakings. According to the dutt.committee (Industrial Licensing Policy Inquiry Committee) "The joint sector would in our view, include units in which both public and private investments have taken place where the state takes an active part in direction and control. In simple terms, the joint sector is a form of partnership between the private sector and the government sector. The concept of joint sector given by the Dutt committees is in favour of the public sector. Moreover, this definition does not specify the fields in which the joint sector ventures were to be encourage, by the nature of control and management, organisational details etc. In this connection Dr. Paranjape, a member of the Dutt. committee, distinguishes between two types of joint sector units :

(a) large enterprises with the state and public financial institutions taking a commanding share in the equity holding, the final authority for laying down policies and making topn appointments will be with the government. 

(b) small and medium enterprises with a small proportion of equity with the state and public financial institutions the government will maintain a watch over the management of the enterprises through its nominees in the board of directors.

     In the much publicised memorandum called "Tata Memorandum on Industrial Growth" submitted to the Government of India, J.R.D. Tata gives what he call say minimum agreed defintion of the joint sector. According to him a joint sector enterprise is intended to be a form of partnership between the private sector and Government in which state participation in capital will be not less than 26 percent, the day-to-day management will normally be in the hand of the private sector exercised by a board of directors on which government is adequately represented.
   Out of the two defination, it is understood that the Dutt. committee's concept of joint sector is in favour of public sector, whereas the defination of Tata is in favour of the private sector. But the Government accepted the concept of joint sector in the industrial policy decision in 1970 and 1973 which are given below:

    (a) joint sector should recognise the governments socio-economic objective of the five years plans.
  (b) Joint sector will be regarded as a promotoinal instrument to create new and medium type entrepreneurs.

  (c) Government will ensure for itself and effective voice in guiding policies, mangement and operations of a joint sector venture. 

  (d) The joint sector projectes will be welcome in industries from which the private sector has been excluded.

                Considering the above concepts, the central government laid down a few guidelines regarding the ownership and 
management of joint sector venture as follows :
 (a) If a big business house or a foreign majority company wants to start a joint sector venture, permission from the central government is needed.
(b) If there is a foreign collaboration or participation with the domestic partner:
        (1) Government will have 25 p.c.
        (2) Indian business concern 20 p.c. foreign investors 20p.c. 
        (3) Investing public will have 35 p.c. of the paid up share capital of the joint venture.
(c) If there is no problem of foreign collaboretion, Government will have 26 p.c. , private enterprise 25 p.c. and investing public and financial institutions will have 49 p.c. of equity ownership.
(d) No single party can hold more than 25 p.c. without prior central government sanction.

Examples of joint sector in India :
        In pre-independence days the princely states of Mysore and Hyderabad had established several industrial enterprises in which equity participation by the general public was permitted. In the years following independence, a number of companies were floated by the Government in collaboration with the private sector by sharing ownership management and control with them. This form of industrial organisation was found appropriate for the import of foreign technology and capital, as in Cochin Refineries (1963), Madras Refineries (1965) and Madras Fertilizers (1966) for the utilisation of indegenous entrepreneurial and managerial resources, as in Air- India (1947) for the use of organizational capabilities of existing industrial houses, such as the Bind Heilgers group in Bolani Ores (1957) and the mobilisation of financial resources from the public as in the Gujrat state Fertiliser company (1965), Hindustan machine tools, Indian Telephone Industries Ltd. Praga Tools corporation, Indian Rare Earths Ltd. etc. are the examples of Joint sector enterprises in India.


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