Why Corporatisation of ordnance board is a must – Defence News of India

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Why Corporatisation of ordnance board is a must – Indian Defence Research Wing


SOURCE: ENS

On 16 May 2020, the government announced the decision to corporatise the Ordnance Factory Board (OFB) to improve its autonomy, accountability and efficiency. It evoked an overwhelming response from the Armed Forces, which felt the step was overdue but suboptimal. Almost everyone wanted the OFB to be privatised on a PPP model. Simultaneously, there were discordant notes from within the OFB. The feedback indicated that the management and unions were both against the corporatisation decision.

Thereafter, the MoD started the process of hiring a consultant to prepare a corporatisation roadmap. Unions opposed the move and have now given a notice to go on strike from 12 October 2020. These events are happening when the Sino-Indian situation is tense with a likelihood of conflict escalation. There is absolute clarity that the OFB is beset with major problems, the foremost being poor quality, high cost, lack of accountability, inordinate delays and a very poor work culture.

The Armed Forces have never been satisfied with the output of the OFB. Very specifically, the ammunition produced by it is often unreliable, unsafe and has lower-than-specified shelf lives. As a result, huge quantities of ammunition are destroyed or rendered non-operational. It adversely affects operational readiness. National security is jeopardised. This situation is unacceptable and must be arrested. There is no doubt that reforms are necessary. Past government committees even recommended full privatisation and breaking up of the OFB. Corporatisation is the minimum reform.

It is unacceptable that OFB unions are preparing to strike when the nation is almost at war. This is the time when they should be standing behind the Forces and ensuring that frontline soldiers have enough clothing, ammunition, weapons, guns and missiles to fight adversaries. The government should ban such strikes at this time. Are the workers being instigated by party politics or forces inimical to the nation? Is there a China hand behind the strike? There is obviously more to it than meets the eye. The worker unions should reflect—can the Armed Forces go on strike due to delayed supply of substandard ammunition and other warlike stores?

The OFB has not improved despite huge efforts in the past at internal reform. If this situation continues, the Armed Forces will refuse to use substandard OFB products. If corporatisation is resisted, the government may rely on the private sector to meet its needs. There is no choice. The management and workers of the OFB need to see corporatisation in the correct perspective. Corporatisation does not mean their jobs are being taken away or their livelihood is at stake. The idea is to improve efficiency and the image of the OFB that is at rock bottom.

There is a requirement for dialogue with the OFB as a whole. They should be made to understand the intent and necessity of corporatisation. It means turning the hidden potential and strengths of the OFB into a competitive profit system through better work culture like other DPSUs. It will actually benefit everyone in the long run. If the OFB must export weapons, there is definitely a requirement to improve its image internationally. That is feasible only through reforms.

There are, however, some issues involved. The workers need to be reassured and their fears allayed. Their jobs will not be lost. Reforms will only lead to better and enhanced capacities and result in an Atmanirbhar Bharat and more jobs. The second issue is to deal with the management that consists largely of the IOFS cadre. These officers might not fit into a corporate entity. Hence some options of lateral entry into other government departments have to be thought of while fresh blood is brought in.

Appointment of a consultant to recommend the corporatisation roadmap must be done with care. Foreign ones are best avoided. The OFB is a huge strategic asset. It has tremendous strengths that should be kept under wraps. Our workers are experienced. Our future plans should be safeguarded. Its transformation will take time. It should be done deliberately, in phases, with care. Reform should be as per our conditions, culture and practices. The expertise to reform exists indigenously. Further, there is considerable pre-corporatisation groundwork required. Certain structural changes should be carried out even before the consultant comes into the scene.

The Board can be given financial powers equivalent to other DPSUs. The OFB can start functioning under clearly visible and foreseen verticals. The financial advisory & audit and the quality assurance systems can change. An implementation committee should be appointed to oversee the transformation on a time-bound basis. People who wrote previous reports on reforming the OFB are still in circulation. They should steer and execute what they had recommended! All stakeholders must be part of the reform. Reluctance of workers seems to be a fear of the unknown.

A major problem of the OFB is the disconnect and insensitivity to users. A greater connect between the Services and the OFB must commence. There is a strong case for the DDP (MoD) to be a bespoke organisation. Mere reform of the OFB alone won’t do. The MoD must also undergo a concomitant reform.  The OFB is a national strategic asset with eroded roots. It needs a rebuild. If the rebuilding is done effectively, India will benefit immensely. To quote an equivalent, state-owned enterprises in China used to be called their ‘Rust Buckets’ till the 90s. After reforms, they are now the engines powering China to superpower status.

It is time the OFB sheds its rust bucket image and becomes India’s growth engine.(The author has guided important projects like the Dhanush 155mm gun system, streamlining of BMCS plant, making up artillery ammunition shortfalls, manufacture of Pinaka rocket systems and other new initiatives of the OFB)