UFOE and the Seven New DPSUs of Ordnance Factories Locked in a Standoff

A fresh confrontation has erupted between the United Forum of Ordnance Employees (UFOE) and the seven new Defence Public Sector Undertakings (DPSUs) carved out of the erstwhile Ordnance Factory Board (OFB), as the contentious issue of employee absorption enters its fifth year since corporatisation.

Background: Corporatisation vs. Commitments

The Government of India corporatized the 41 Ordnance Factories in 2021, restructuring them into seven DPSUs. Employee federations, including the AIDEF and BPMS, opposed the decision, citing earlier commitments from successive Defence Ministers—including the late Manohar Parrikar—that the Ordnance Factories would not be corporatized.

The matter reached the Madras High Court, which upheld corporatisation as a policy decision but placed strong emphasis on the Government’s written commitment—especially Para 55(a) and (b) of its affidavit—that employees would continue as Central Government employees on deemed deputation unless they chose absorption.

DDP Pushes for Absorption Package Talks

As part of its next step, the Department of Defence Production (DDP) directed the CMDs of the seven new DPSUs to hold stakeholder consultations on a Draft Absorption Package jointly prepared by the corporations.

Secretary (Defence Production) held a meeting on 10 November 2025, urging all recognized employees’ organizations to participate.

UFOE Rejects Meetings with DPSUs

In a virtual meeting on 20 November 2025, the UFOE unanimously resolved not to attend any meeting convened by the CMDs of the new DPSUs.

Key Reasons:

• More than 80% of the defence civilian workforce of the 41 factories has already submitted Advance Options to remain as Central Government employees.

• 863 IOFS officers have submitted similar requests.

• The UFOE insists that the service conditions promised before the High Court be upheld.

The CMDs’ first consultation meeting is scheduled at Dehradun on 26 November, followed by sessions in Kanpur, Kolkata, Chennai, Pune, and Jabalpur, concluding on 27 December 2025.

UFOE has communicated its decision to the DDP and all seven CMDs on 21 November 2025.

UFOE’s Three Major Decisions

• No participation in DPSU-led discussions on absorption packages.

• Willingness to negotiate only with DDP on modalities to continue as Central Government employees till retirement.

• A renewed appeal to issue a formal notification guaranteeing CG service status, benefits, and protections—consistent with the Government’s affidavit to the Madras High Court.

What Happens Next? The Government’s Dilemma

• With employees refusing to engage on absorption, the Government faces a critical impasse.

• The mandate given to DPSUs was strictly to consult on the absorption package, not to negotiate on Central Government retention.

• As per commitments recorded before the High Court, the Government cannot force employees to join the DPSUs.

AIDEF General Secretary C. Srikumar Speaks Out

Speaking to www.indianpsu.com, C. Srikumar, General Secretary, AIDEF, warned against treating the issue as a “prestige battle.” “The Government cannot disturb the service conditions of its own employees. These workers joined the Ordnance Factories as Central Government employees. Why should they resign their secure Government jobs to join DPSUs that are struggling for orders?”

He further argued: Ordnance Factories serve as War Reserve, not profit-driven companies. DPSUs are facing an unequal competition with private defence manufacturers. The only viable solution is a notification retaining all 58,000+ Defence Civilian Employees as Central Government staff on deemed deputation, similar to the model adopted for All India Radio and Doordarshan employees after Prasar Bharati’s formation.

Impact on National Defence Production

According to unions, reaffirming CG status is crucial for ensuring:

• Availability of highly skilled, experienced manpower

• Consistency in production for Armed Forces

• Smooth training of new recruits if the Government restarts recruitment

Conclusion

The standoff is escalating as the DPSUs prepare for six nationwide consultations that the employees refuse to attend. The next move now lies entirely with the Government of India, which must balance its corporatisation policy with legally recorded commitments and growing employee unrest.