The government is set to accelerate its divestment program, with plans to sell minority stakes in about six state-run companies through offers for sale (OFS) and IPOs. Divestment Secretary Arunish Chawla confirmed that sectors like insurance and defence may see heightened activity, alongside an IPO from a natural resources company this year. The strategy is aimed at unlocking value for investors, meeting fiscal targets, and sustaining reform momentum after a subdued start to FY26.
Core Development
At the Network18 Reforms Reloaded 2025 event, Chawla said markets have stabilized, creating room to speed up divestment. The pipeline includes half a dozen minority stake sales and one to two strategic disinvestments.
The government is also eyeing an IPO of a natural resources company or subsidiary, with names like ONGC Green Energy and NHPC Renewable Energy under consideration. Additionally, the long-awaited IDBI Bank strategic sale is targeted for completion this year.
Key Drivers / Issues
The divestment plan is shaped by:
The FY26 budget estimate of ₹47,000 crore from capital receipts.
The need to comply with SEBI’s minimum public shareholding rules, especially for LIC.
Opportunities in insurance and defence sectors, where investor interest remains strong.
Recovering market sentiment after earlier volatility.
Stakeholder Impact
For investors, the moves create fresh opportunities to participate in PSU value creation. PSUs benefit from stronger market visibility and potential efficiency gains. The government aims to balance fiscal consolidation with capital market development. For the economy, sustained divestment supports liquidity and broader financial sector reforms.
Industry & Policy Reactions
Chawla refuted claims that disinvestment in India is “dead,” stressing that the government is confident of exceeding its ₹1.2 lakh crore dividend target this year. Market experts welcomed the renewed momentum but cautioned that execution speed and investor appetite will be crucial.
Challenges Ahead
Global and domestic market volatility could slow stake sales.
Resistance from unions and political stakeholders in sensitive sectors.
Execution risks in large transactions like IDBI Bank.
Ensuring OFS and IPOs generate sufficient demand without steep discounts.
Strategic Outlook
The government is betting on minority stake sales and select IPOs to reinvigorate divestment. If successful, it could reset the narrative around PSU reform, strengthen fiscal balance sheets, and attract long-term investors into strategic sectors like defence, insurance, and renewables.
Why This Matters
India’s divestment program is key to fiscal consolidation and market deepening. By targeting minority stake sales in multiple PSUs, the government signals renewed commitment to reforms and provides investors with new opportunities in high-growth sectors.
