After years of vacillation, the government has decided to revive independent India's first state-owned heavy engineering company that once employed 25,000 but whose workforce has dwindled to less than 10,000.

"The central cabinet has cleared a (Rs.12.18 billion) package for reviving the Heavy Engineering Corporation in (Jharkhand capital) Ranchi," Information and Broadcasting Minister Priya Ranjan Dasmunsi told a news conference here Friday.

He was briefing reporters on decisions taken by the cabinet at a meeting here Thursday night presided over by Prime Minister Manmohan Singh.

As part of the package, a central loan of Rs.150 million will be converted to equity, a non-plan loan of Rs.11.01 billion will be waived and a new bridge loan of Rs.1.02 million will be given to HEC.

"In addition, the company will be able to raise Rs.330 crore (Rs.3.30 billion) by transferring its surplus land and buildings to the Jharkhand government," Dasmunsi said.

HEC, established in the 1950s due to the efforts of India's first prime minister Jawaharlal Nehru with assistance from the then Soviet Union, is located on a sprawling 5,000-acre campus in the heart of Ranchi, with nearly half the land unutilised.

Increasing labour trouble, the gradual withdrawal of Soviet engineers and their total withdrawal after the disintegration of the Soviet Union in 1991 led to the company's steady decline.

Past efforts to revive HEC have failed due to the huge costs involved in refurbishing the plant's outdated machinery, which has not been upgraded since the mid-1980s. Some estimate this would cost upwards of Rs.30 billion.

The HEC campus is today better known as the home of the Jharkhand government, with the secretariat, assembly and legislators' residences located within its precincts.

Questioned about this, Dasmunsi said this was an issue the Jharkhand government would have to deal with.

"As I said, some of the land and buildings could be transferred (to the Jharkhand government)," he noted.