Govt proposes to sell up to 3.5% stake in Hindustan Aeronautics

India is planning to sell up to 3.5% stake in aerospace and defence company Hindustan Aeronautics Ltd this week in a deal that could fetch the government Rs 2,867 crore ($347.16 million), an exchange filing showed on Wednesday.

So far, the government has mopped up Rs 31,110 crore by selling its shares in state-run firms as against its target of Rs 50,000 crore for the financial year ending March 31.

The Indian government stares at missing its divestment target for 2022/23 as it plans to put on hold the part sale of its stake in Hindustan Zinc (HZL) unless the company calls off the nearly $3 billion cash acquisition of two Vedanta Group subsidiaries.

The floor price for the HAL stake sale is set at 2,450 rupees apiece, at a discount of 6.7% to Wednesday's close. The government owns a 75.15% stake in HAL, according to Refinitiv Eikon. The government plans to sell a 1.75% stake on March 23-24, and has the option to sell 1.75% more stake if needed.

Divestments in state-owned firms is a key revenue-raising measure that helps government to spend on infrastructure-building.