Privatization Cannot Build India’s Defence Manufacturing Strength: C. Srikumar

By C. Srikumar, General Secretary, All India Defence Employees Federation (AIDEF)

The decision of the Government of India to allow employees of the seven newly created Defence Public Sector Undertakings (DPSUs) to continue as Central Government employees until retirement is a welcome and long-awaited step. It is the outcome of nearly five years of sustained trade union struggle by the All India Defence Employees Federation (AIDEF), coupled with legal intervention before the Hon’ble Madras High Court.

The notification issued on 15 June 2026, based on the recommendations of the Empowered Group of Ministers, has addressed one of the most significant concerns of the workforce by protecting their service conditions. As employees begin exercising their options from 16 July 2026, there is naturally a sense of relief across the Ordnance Factory fraternity.

However, while the issue of employee status may have been resolved, the larger question regarding the future of India’s Ordnance Factories remains unanswered.

Corporatisation Was Never the End Goal

AIDEF has consistently opposed the corporatisation of the Ordnance Factory Board because we believed that it could eventually pave the way for weakening the public sector defence manufacturing ecosystem and increasing dependence on private industry.

Before the Madras High Court, the Government categorically assured that all seven Defence PSUs would remain 100 percent government-owned and that there was no proposal to privatise them. We welcome this assurance and hope it will continue to guide future policy decisions.

Nevertheless, recent developments raise legitimate concerns.

Private Sector Expansion Raises Strategic Questions

The recent foundation of Adani Defence & Aerospace’s ₹2,500 crore missile manufacturing complex at Shivpuri in Madhya Pradesh is undoubtedly a significant milestone for India’s defence industrial ecosystem. Strengthening indigenous manufacturing is essential for national security.

But the fundamental question remains:

Why are emerging technologies, missile manufacturing programmes and critical defence projects increasingly being entrusted to private corporations while the newly corporatised Ordnance Factories struggle even for adequate workload?

Companies such as Adani Defence, Mahindra Defence, L&T Defence and Bharat Forge are receiving substantial opportunities in advanced defence manufacturing. At the same time, several of the newly formed DPSUs are facing serious operational and financial challenges.

This trend appears inconsistent with the Government’s own commitment of providing “handholding”, financial assistance and policy support to the corporatised Ordnance Factories during the transition period.

Corporatisation Without Investment Cannot Deliver Results

The Government justified corporatisation by promising commercially agile, technologically advanced Defence Public Sector Undertakings capable of competing globally.

That objective deserves support.

However, corporatisation alone cannot create technological capability.

If that was truly the vision, why was similar strategic investment not made in Munitions India Limited (MIL)?

MIL possesses decades of institutional expertise in explosives, energetics, ammunition manufacturing and defence production. It has an extensive manufacturing base, experienced technical manpower and nationwide infrastructure. It should have been one of the natural candidates for developing indigenous missile manufacturing capabilities.

The question is straightforward:

Was Munitions India Limited ever given that opportunity?

Technology leadership requires sustained capital investment, research collaboration, technology transfer and long-term policy support. Merely changing the legal structure of an organisation does not automatically create advanced technological capability.

Several DPSUs Continue to Face Operational Challenges

Today, several of the newly created defence companies continue to struggle.

Troop Comforts Limited (TCL), for example, faces severe financial constraints. It reportedly lacks adequate funds even for statutory capital requirements such as procuring a modern ambulance. Other entities, including Gliders India Limited (GIL), Yantra India Limited (YIL) and Armoured Vehicles Nigam Limited (AVNL), also require greater workload certainty and stronger policy support.

Without adequate production orders, modernisation funding and long-term procurement commitments, corporatisation risks becoming only an administrative restructuring exercise rather than genuine industrial reform.

Defence Manufacturing Is a Strategic National Asset

Defence production cannot be viewed through the same lens as ordinary commercial business.

It is intrinsically linked to national security, sovereign capability, strategic autonomy and supply chain resilience.

Excessive dependence on a limited number of private conglomerates may create a different form of concentration rather than strengthening the overall defence manufacturing ecosystem.

A balanced defence industrial policy should encourage private sector participation while simultaneously strengthening public sector capabilities. India’s national security architecture is best served when both sectors complement each other rather than one replacing the other.

The Road Ahead

The Government has taken a positive step by protecting the service conditions of Ordnance Factory employees after years of sustained dialogue, trade union efforts and judicial intervention.

The next equally important step should be to strengthen the seven Defence Public Sector Undertakings through:

• Assured long-term production workload.
• Allocation of advanced technology manufacturing programmes.
• Capital investment for modernisation.
• Research and development partnerships.
• Policy support that enables these organisations to compete effectively.
• Creation of a stable and conducive working environment for their workforce.

The success of corporatisation should ultimately be measured not merely by changes in organisational structure but by whether India’s public sector defence manufacturing capabilities become stronger, technologically advanced and globally competitive.

That objective requires sustained government commitment, strategic investment and equal confidence in the institutions that have served India’s defence preparedness for decades.

C. Srikumar is the General Secretary of the All India Defence Employees Federation (AIDEF). The views expressed are his own.