Ordnance Factory Board: Need for corporatisation & protests against reforms

Policharcha.com | Updated: June 24, 2021, 12:35 IST

Ordnance Factory Board: Need for corporatisation & protest against it

The decision of the Union Government to corporatise Ordnance Factory Board (OFB) into seven Public Sector Undertakings has brought together factory workers of Left, RSS, and Congress in unison to protest against it. The unlikely combination, on June 20, said in a joint circular that they will serve the notice for an indefinite strike on July 1, and commence the nationwide strike on July 19 against the Government’s decision.

All India Defence Employees’ Federation (AIDEF) of Left unions, Bhartiya Pratiraksha Mazdoor Sangh (BPMS), an arm of RSS-affiliate Bharatiya Mazdoor Sangh, and Indian National Defence Workers’ Federation (INDWF) of the Indian National Trade Union Congress organised a virtual meeting on June 20.

“The meeting took a very serious note of the manner in which the government has dismantled the ordnance factories and sabotaged the future of the committed workforce of these factories. The meeting also expressed its serious concerns of various violations by the government", said a joint statement by the group. The joint statement also talked about taking the legal route against this decision.

This article will be explaining about these reforms, protests against which have surprisingly cut across ideological differences.

Ordnance Factory Board

OFB is a group of 41 factories, nine training institutes, three regional marketing centres, and five regional controllers of safety, working under the Department of Defence Production in the Defence Ministry. Often called the "Fourth Arm of Defence", the Board is the second largest Defence Equipment Manufacturer in Asia, and the largest in the country. Their products include civilian and military-grade arms and ammunition, explosives, propellants and chemicals for missiles systems, military vehicles, armoured vehicles, optical devices, parachutes, support equipment, troop clothing, and general store items. Beside the Armed Forces, these factories also serve Paramilitary Forces and Police Forces. OFB is the world's largest government-operated production organisation, and the oldest such organisation in India. Its history dates back to more than 200 years.

The corporatisation plan aims to subsume all the 41 units into seven PSUs, which means the end of the OFB.

The Reforms

On June 16 this year, the Union cabinet approved the corporatisation plan which will end the current OFB, and convert it into seven totally Government owned PSUs with professional management like the Hindustan Aeronauticsl Limtited (HAL). It would mean that the organisation will cease to be a government department, and will be converted into a corporate entity. The Government claims that this restructuring will transform the organisation in to a productive and profitable asset.

The plan, which had been in the pipeline for almost two decades now, has got a decisive push under the current Government. At least three committees on Defence reforms set by the governments between 2000 and 2015 had recommended the corporatisation. Modi Government listed this plan in their list of 167 transformative idea to be implemented within 100 days of re-election. The Government last year announced it officially, and on June 16 the plan got the approval from Cabinet. Experts see this as a big and much needed reform in the defence manufacturing sector.

Under the seven entities, there will be an Ammunition and Explosives Group, which would be mainly engaged in production of ammunition of various caliber, and explosives with huge potential to grow exponentially, not only by way of Make in India, but also by manufacturing for the world.

The Vehicles Group would mainly engage in production of defence mobility and combat vehicles such as tanks, trawls, armoured personnel carriers, and mine-protected vehicles.

The Weapons and Equipment Group would be mainly engaged in production of small arms, medium and large caliber guns, and other weapon systems. 

There will also be a Troop Comfort Items Group, an Ancillary Group, an Opto-Electronics Group, and a Parachute Group.

These entities are expected not only to fulfil the domestic demand, but also to aim at exploring new markets outside the country.

The need for reforms

As mentioned above, multiple committees on defence reforms had recommended this change. There have been complaints about OFB's poor quality products, delayed timelines, and lack of technological advancements. The military has also complained that the cost is also high (though OBF takes no profit for its supplies to it).

With the China challenge rising, India has looked to acquire more weaponry, and this reform is another step in that direction. There was also friction between armed forces and the OFB over accidents due to military equipment failures last year.

“This restructuring is aimed at transforming the ordnance factories into productive and profitable assets, deepening specialisation in the product range, enhancing competitiveness, improving quality, and achieving cost efficiency,” an official had told media on the advantages of this reform.

This change is expected to double OFB’s turnover to approximately $4 billion by 2025, and in the process, address concerns about the quality of its products.

Why are workers protesting?

The strange trio of worker unions of Left, Congress, and RSS have been against the proposed reforms right from the announcement of it. Initially, they announced an indefinite strike from October last year, but the strike was postponed as talks with Chief Labour Commissioner were launched. Now, after the Cabinet's consent, the associations have again announced their idea of indefinite strike. The nationwide strike is planned to start from July 19.

About 80,000 workers engaged with OFB fear job loss. Another apprehension clouding their mind is that this reform will eventually lead to privatisation of this sector. 

Despite stiff opposition from labour unions, Government has went ahead with the reform, which many experts see as a much needed change in the defence manufacturing industry.


This article is written by Gaurav Thakur

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