By Dr. Gyan Pathak
From October 1, 2021, India will do away with its 246 year old Ordnance Factory Board (OFB). There will be seven new smaller Defence Public Sector Undertakings (DPSUs) in its place. Modi government is purportedly doing this under ‘Atmanirbhar Bharat’ (self-reliant India) programme. Critiques say it would have disastrous effect on the self-reliance in defence industry of the country, while employees of the OFB will be observing it as a ‘Black Day’.
OFB is the biggest defence manufacturing organization of the country even on the last day of its existence today on September 30, 2021. It has been manufacturing everything from tanks and armoured vehicles to rifles, ammunition and clothing for the armed forces. On September 28, the Centre issued orders of dissolution of this state-owned arms manufacturer, which has 41 factories, about 70,000 employees, and an annual turnover of around Rs 19,000 crore. The Centre has issued this order despite the fact that in the referendum recently carried out in all 41 factories and OFB headquarters, 61,199 out of 61,564 employees who participated in the referendum voted against the government’s decision. Only 365 employees were in favour of it.
The critics and the employees of the OFB are quoting the modus operandi of the government, that the citizens of the country have been witnessing for years – first, state-owned enterprises are systematically sabotaged, then defamed for not functioning well, then they are disposed off so that other private entities may prosper. Sometimes they are corporatized into small PSUs, and the PSUs are disinvested, sometimes closed down and even sold to the private corporate. Everything is done in the name of national interest, encouraging competition, self-reliant and so on. The whole affair of dismantling OFB is seen in this context, and it is felt that government will ultimately destroy this national asset in favour of some private corporate.
In its order the Centre has said that the OFB, from October 1, will be split into seven new defence PSUs, namely Munition India Limited, Armoured Vehicles Nigam Limited, Advanced Weapons and Equipment India Limited, Troop Comforts Limited, Yantra India Limited, India Optel Limited, and Gliders India Limited. These companies will be 100 per cent state-owned.
The critics point to the National Monetisation Pipeline of the Modi government and ask, “What is the guarantee that these PSUs may not be disinvested once the opposition to the plan weakens?” Disinvestment of so big an entity as OFB is far more difficult than the smaller entities. They allege that government has broken it into seven pieces to make them smaller enough to be able to dispose them off easily at the opportune time.
The Board of Ordinance was established in 1775 in Fort William, Kolkata, which was then the base of East India Company’s Bengal operations. The OFB in the present form was established only about four decades ago in 1979 to make the manufacturer more efficient. However, during the COVID-19 crisis, when the people of the country were under great distress, the Modi government was busy in realizing their ‘dream’. They announced many controversial decisions in the name of ‘Atmanirbhar Bharat’ and one of them was dismantling of the OFB, apart from enactment of labour codes, farm rules etc. The decision to this effect was first announced by Finance Minister Nirmala Sitharaman on May 16, 2020. The announced objective was to improve autonomy, accountability and efficiency in ordnance supplies. The Cabinet Committee on Security approved it in July 2020, and an Empowered Group of Ministers (EGoM) was set up. All the three recognised employees federations had also threatened an indefinite strike last year against the government’s decision. Multiple rounds of talks did not yield any result. Government brought legislation in July 2021 and has made any such strike illegal, before the final order of dissolution of OFB, and creation of seven smaller PSUs was passed.
The first casualty of this decision is OFB itself. The employees are the second to suffer. They will be handed over to the new PSUs on terms of foreign service without any deputation allowance, initially for a period of two years. Other institutions and their employees such as schools, hospitals etc would be transferred to Directorate of Ordnance Factories, which will be formed in future, also initially for two years. Government has assured them that they would get all the benefit according to the rule, and not inferior than they have been getting. However, the fact is that the employees will be no more personnel of Ministry of Defence, but will be employees of the new corporates or PSUs, which will make all the difference for them. Not only that, their future is uncertain because each of the new DPSUs is required to frame rules and regulations related to service conditions of the absorbed employees. Each of the DPSUs should also “seek an option for permanent absorption from the employees on deemed deputation” to that respective DPSU, within a period of two years, the order read.
Employees of the OFB have said they would oppose the order to dissolve the OFB. Employees federation has said they would observe the day as a black day, with the entire ordnance factories workforce boycotting their lunch. It should also be noted that they have also gone to the Madras High Court challenging the Union government’s move of the corporatisation of 41 ordnance factories. The court has issued notice to the Centre in this regard. “We will fight till the end as the move is against the employees’ wishes,” C. Srikumar, general secretary of the employees federation, has said.
The employees union of ordnance factories has been opposing the move fearing privatisation of factories, and if their fear comes true, it would be disastrous for India’s defence sector, since the management, control, operations, and maintenance of the defence production units will go into private hands. Even if these seven corporate DPSUs remain as it is, it would amount putting the entire defence system of the country into seven hands rather than the defence ministry or the Government of India which have hitherto been handling the task.
It is already known to all how the PSUs are handled by the political establishments. What is the guarantee that the newly created DPSUs will be free from such political interference? Under the Ministry of Defence, the OFB has been free of such interference until September 30, 2021.
As it has been reported, Ministry of Defence hopes that the new structure will help overcoming various shortcomings in the existing OFB, to which one can ask, “Does killing an organization amount to overcoming its shortcomings”? Elimination of so called insufficient supply chains, and improving quality could have been done even under Ministry of Defence. Now the Ministry of Defence says that these new companies will be given incentive to become competitive so that they could explore new opportunities in the market, including exports. One fails to understand why the OFB should not have been given such encouragements in place of altogether killing the defence organization. It is not the way to self-reliance for defence preparedness, at a time when we need it most. India should not have sabotaged OFB for ‘money-making’ indicated by the terms ‘market and exports’. (IPA Service)