The Pandemic of Corporatisation: Remember, Ordnance Factories Are Not For Profit!

Finance Minister Nirmala Sitharaman, while making various announcements in the name of COVID-19 Relief Package, informed on 16/05/2020, that the Ordnance Factory Board would be Corporatised and also will be listed in the Market. After this announcement made in the name of Atmanirbhar Bharat Articles are being written by many so called Defence Experts including retired Army Officers in support of the Government decision. There are opposition from the 80,000 strong employees of the 41 Ordnance Factories and the Trade Unions on the Govt. decision. The Trade Unions have given a Notice to the Government for an indefinite strike commencing 12/10/2020 demanding to withdraw the decision of the Government to Corporatise the Ordnance Factories. The Ministry of Defence have quoted various expert Committees setup in the past, such as TKA Nair Committee (2000), Kelkar Committee (2005), Raman Puri Committee(2015) and Shekatkar Committee (2016), which have given recommendations to Corporatise the Ordnance Factories. However  the Ministry of Defence have conveniently ignored the fact that the recommendations of Nair Committee, Kelkar Committee and Raman Puri Committee etc., were rejected by the previous 4 Defence Ministers.

It is on record that Ministry of Defence itself has submitted before the Parliamentary Standing Committee 14th Loksabha(2005-06) that the proposal to convert OFB in to a PSU is not a correct proposition. Let us go through the statement made by MoD before the Parliamentary Standing Committee:-.

Para 1.1: “Ordnance Factories function as a Govt. Department and are accordingly governed by the applicable rules and Regulations. As an established National Policy, Ordnance Factories are also required to maintain idle capacities to take care of surge demand in emergent war situation. In a purely commercial term, maintaining idle capacity would be detrimental to the business interest of the company(PSU) and would appear to be a reason for low performance in terms of turnover and profits. In turn, it would also place such DPSUs in disadvantageous position in a competitive environment.

The Government  is deviating from its own position and statement and are harping on the recommendations of the various Committees, who deviated from their Terms of References and recommended for Corporatisation of OFB. The recommendations of all these Committees were correctly rejected by the past 4 Defence Ministers, because they are convinced that Corporatising OFB is not a wise decision.
OFB is the only organization in the world which makes the entire range of ammunition from 5.56mm to 155mm and weapons from the 5.56mm INSAS rifle to 155mm x 45 Calibre ‘Dhanush’ artillery gun system. At another level, Metal and Steel Factory at Ishapore is the world’s largest manufacturer of weapons grade steel from secondary sources. The Troop comfort items like Battle Field Dress, Protective Clothing, etc., are of world standard.

The record of OFB for indigenization is far better than the DPSUs. OFs are supplying the engines for T-72 and T-90 Tanks with 100% indigenous content to the Indian Army. OFB has consistently displayed an exceptional record in absorbing manufacturing technologies received through foreign OEMs. OFB products have an indigenous content of 90% of the turnover, highest  when compared to any DPSUs. With indigenization level of over 97% in Ammunition items, OFB has almost nil dependence on foreign countries. Ordnance Factories are the true example of “Atmanirbhar Bharat”.

OFB has always stood by the Indian Armed Forces during its times of need. For its contribution during Kargil War, OFB won accolades from the then Chief of Army Staff and the parliamentary Standing Committee. OFB stretched its capacity in all the critical items as per the demand even to the extent of 200% of pre-kargil supplies. In the foreword to “Arming the Indian Arsenal”, former COAS Gen VP Malik has stated,  “Indian Ordnance Factories, which could produce ammunition and some equipment for which they had the necessary technology, rose to the occasion. But we faced considerable problems in procuring items that had to be imported at short notice.” OFB’s supplies did not suffer the post Pokharan-II sanctions and it contributed its mite during operations Vijay in 1999.

Corporatisation will kill OFB much faster. And there will be a big loss to the nation, as  exist of a long standing player will migrate the market towards oligopoly, even to monopoly to the extent of dependence on players from abroad, defeating the very objective of self reliance. May be the nation has to go with a begging bowl to the unscrupulous foreign sources as has been seen recently.
Converting Ordnance Factory Board in to a Public Sector entity will not be in National interest and maintaining Defence capability in term of surge capacity, providing lifetime support for spares, supplying fluctuating volume of demand and uneconomic order quantity, not feasible with commercial orientation.

The Government as a policy has already decided to Privatise almost all the PSUs by retaining only 4 PSUs in the strategic sector. There are already 9 PSUs under the DDP. If OFB also becomes a PSU, then what it may meet the same fate as would be meted out to all but the 4 blessed DPSUs. It is known fact that Corporatisation is the first step towards privatization. The Government should have the wisdom and  largeness of heart to listen to its own employees. Adamancy on decisions taken is not a mark of wisdom, nor is having an open mind to correct an error of Judgment is not a mark of weakness. Why the Govt. is feared to listen to the voiced concern and anxiety about the consequences of its decision on National Security and Defence preparedness. The political executives should not blindly listen to the biased suggestions of the bureaucrats especially on National Security and Defence matters, since many of them do not have the desired knowledge and experience in the field.

The views expressed are those of C.Srikumar, General Secretary of All India Defence Employees Federation and Convener of AITUC Public Sector Unions

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