Corporatisation of OFBs – Achieving Self Sufficiency in Defence

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Probably the toughest time any Indian government had faced till now. 2020 has challenged the Modi government in every possible way. Internal disturbances with riots happening in different parts of the country, a global pandemic that has killed millions around the globe, bad GDP figures indicating economic slowdown which has led to large scale unemployment in the country, Chinese aggression along the north and north eastern border of our country, certainly 2020 is a year to forget for Indians.

Out of these problems, one problem that stands out and which is clearly a threat to our nation’s sovereignty is the Chinese aggression in Ladakh. China is in full mood to change the status quo and capture the strategically important Galwan, Depsang, Gogra and Pangong Tso. These acts by the Chinese People’s Liberation Army are worrying because they are very much similar to their acts before 1962 war broke out. The army should have access to modern arms, ammunitions and equipments so that if the situation goes from bad to worse, they’re ready for it.

By launching the atmanirbhar package, the government is not only looking to revive the economy but to also deal with the inefficiencies of the defence sector. The package consists of all those steps which the government ideally should have taken long time back like freeing the agricultural sector, promoting Indian industries and their products, giving financial incentives to foreign companies for investing in India, etc and one such step taken to improvise the defence is of corporatisation of Ordnance Factory Boards (OFBs).

From strong and tough military weapons and equipments, tanks, assault rifles to uniforms and parachute for the jawans, the OFBs produces all what the Indian Army requires. Formed in 1775, the ordnance factories are the oldest organisations in India dating even before the establishment of Indian Railways. Their existence can be traced back to the days of British colonialism. The main reason why the British started these factories was to increase their power and colonial base in India. The aim of the OFB, which was formally founded in the year in year 1979 consisting 41 factories, is “form an integrated base for indigenous production of Defence hardware and equipment, with the primary objective being self-reliance in equipping the armed forces with state-of-the-art battlefield equipment”. This makes it very evident that GOI’s primary motive has always been achieving self reliance and sufficiency even before the term ‘atmanirbhar’ got famous. Self reliance in the defence sector becomes extremely crucial during challenging times so that any urgent need for arms and ammunitions can be met without any delay.

These OFBs are completely unorganized and cluttered with unaccountability and inefficiency. They lack modern technology. The products manufactured by the OFBs are often expensive, supplied after long periods and do not meet the required quality standards. As per Additional Controller General of Defence Accounts Report of 2016, the OFB was overcharging the army for battle tanks to clothing to general stores. More than 80 per cent of the OFB’s orders come from the army, though the cluster of 41 factories meets barely 50 per cent of the army’s requirements. The OFBs enjoy monopoly which doesn’t incentivize them to innovate and look for modern means of production. Outdated products produced by the poorly managed and controlled OFBs have caused ammunition related incident every week. New equipments produced by the OFBs have a suffered explosion. Thus the weapons which are produced to aid the soldiers in a battle and protect them have been counterproductive and have put their lives at risk. The aim of achieving self sufficiency in defense was farfetched because of the poor conduct and management of OFBs.

Various committees had been set up to deal with the problem of inefficient OFBs. Proposal to restructure OFBs has been made by various committees like T.K.A. Nair Committee in 2000, the Vijay Kelkar Committee in 2004 and the Raman Puri Committee in 2015 but successive governments have ignored the recommendations. The Nair Committee in 2000 itself had suggested Corporatisation of OFBs. Its only 20years after that the government has given a nod to corporatize OFBs as per the recommendations given by the Shekatkar committee to do it in a phased manner.

Even before coming with the idea of corporatisation, the government in 2019 put a dent on the monopoly of OFBs by allowing the army to buy 275 ‘noncore’ from open market. Corporatisation process is indeed a good initiative taken to make the country truly self reliant in defense. Corporatisation will allow the OFBs to have features like more accountability, innovation, efficiency which is seen in private companies and will also allow the government to retain its ownership. Thus OFBs will be state owned companies having features of a private company. The decision to corporatise has come after the Ministry of Defence consulted top officials of the OFBs. The delay which is observed in supplying arms and ammunitions to the army will be minimized, factories will be well managed by a board of directors and management. The corporatisation will reduce the import of military equipments and will increase the possibilities of the factories to enter in agreements with different foreign factories and produce high quality modern arms and ammunition. If things go smooth and well, India can be one of those countries that exports arms as well.

Corporatisation is considered to be a road for privatization and thus many unions, employees, Bharatiya Majdoor Sangh (RSS affiliated trade union), Centre of Trade Unions (CPM affiliated) have objected the move. The fear that soon or later, after Corporatisation, OFBs will be privatized and the employees working in these factories will be subject to the evils of privatization. Also they argue that Corporatisation of OFBs is not viable because of fluctuations and long gap between orders. But Corporatisation of OFBs is on government’s agenda since a long time and it was one of those acts which the government had aimed to do within the first 100 days for the second tenure. Also considering the recent Chinese aggression and the increase in infiltration activities by terror state of Pakistan, the government is unlikely to pay any heed to the protests launched against the Corporatisation.

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