As per reports, the employees of Ordnance Factories have called for indefinite strike from October 12 against the finance minister’s announcement of the corporatisation of Ordnance Factory Board (OFB). Headquartered in Kolkata, OFB is said to be among the oldest and most inefficient organizations in the world. A white elephant of the Nehruvian economy, it employs more than 80,000 people in 41 ordnance factories, 13 ordnance R&D centres, and nine ordnance institutes of learning.
Often called the “fourth arm of defense”, it is disliked by the rest of the three arms- Army, Navy, and Air Force- due to production of inefficient weapons and untimely delivery. The Armed forces are often forced to procure some low-skilled arms and ammunition from Ordnance factories because it has no other buyer given inefficient and sub-standard products. In May 2019, The Tribune reported, “The Army has sought immediate intervention of the Defence Ministry to check rising cases of accidents involving battle tanks, artillery and air defence guns due to ‘poor quality’ of ammunition being supplied by the OFB.”
The idea of the corporatisation of Ordnance Factories was floated as early as 2000 by the Nair Committee but the leftist ecosystem and its employees were so strong that the Vajpayee government could not implement those reforms at the time. After that the Congress-led UPA came to power and given the far left of centre allies it had, there was no question of the Manmohan Singh government implementing these reforms. Now the Modi government has decided to roll the dice and address the lack of indigenous production capacity in the defence sector.
The Department of Defense Production, under which state-owned production units like HAL, Ordnance Factories, and many other companies operate, remains the weakest link of the Indian armed forces. The country had to spend billions of dollars on defence procurement due to inefficiency of OFB, HAL and other state-owned producers. Despite their decades of existence and India’s third-largest defence budget, OFB and HAL- two of the largest state-owned contractors of Indian armed forces- ranks 37th and 38th in the global ranking of the defence contractors by revenue.
The allies of India like Sri Lanka, Bangladesh, Maldives, Myanmar are forced to purchase defence equipment from enemy countries like China due to inefficiency of India’s state-owned producers. These countries are defence allies of India but they purchase defence equipment from China because Indian companies are not able to meet their demand, and how would they? These companies cannot meet the demand of Indian armed forces and if our domestic forces are not willing to use equipment manufactured by OFB and HAL, why would any foreign country go for them.
Apart from the purchase of the rotten equipment worth around 14,000 crore rupees, the Ministry of Defence also gives around 700 crore rupees to the Ordnance Factory Board to subsidize their losses from the overall operation. Similarly, HAL continues to have a red balance sheet despite the purchase of its inefficient equipment by the armed forces. Successive CAG reports have criticized the OFB for its inefficiencies.
As per the report, Ordnance factories achieved production targets only for 49 percent of items and expenditure on human resources constituted 33 percent of budget compared to 20 percent on average for private companies. And, the audacity of the OFB employees is such that they are ready to protest despite bagging 33 percent of expenditure and making OFB bankrupt while supplying sub-standard products to Armed forces.
“Work-in-progress (unfinished items lying on the shop floor) constituted 32 percent of the inventory. Orders as old as year 2009-10 were yet to be delivered, a delay of 10 years. Apple graduated from iphone 4 to iphone 11 within this period and here we are still in a primitive state of functioning.” wrote Rajan Kochhar, retired Major General, in Economic Times, on Ordnance Factories.
As per the CAG report, the inefficiency of Ordnance Factories adversely affects the preparedness of Indian Armed Forces at a time when the country faces the threat of a two-front war. “A significant quantity of Army’s demand for some principal ammunition items remained outstanding as on 31 March 2018, thus adversely affecting their operational preparedness. In addition, the exports by OFB decreased by 39 per cent in 2017-18 over 2016-17,” the CAG report said.
Given the Himalayan inefficiencies of Ordnance Factory Board, the government must crackdown on employees who are protesting against the corporatization of the organization. And, for the sake of our armed forces who are facing China on one front and Pakistan on the other, the white elephant of the Nehruvian economy should be corporatized as soon as possible.
