Perform to survive: Why defence production should be corporatised

While defence forces are combating People’s Liberation Army (PLA), in most challenging terrain and hostile weather, its oldest component Ordnance Factory Board (OFB) had decided to go on strike from October 12, at most inappropriate time. Mercifully, strike by 82,000 strong workforce, spread over 41 factories, world’s largest government operated production organisation has been deferred. This so called, ‘Fourth Arm of Defence’ or ‘Force Behind the Armed Forces’ has not only failed to live up to expectations of Armed Forces, raison d’etre, for its very existence but has been insensitive to its genuine concerns. The trigger for unrest in OFB has been fuelled by government directive and relentless push for corporatisation of ordnance factories. To put it bluntly, it is rank obduracy of unions, bordering on blackmail, to resist reforms necessitated by contemporary realities. The need for modernisation been repeatedly flagged by multiple committees and really requires no further elaboration.

Much belated announcement was made by finance minister on May 14 as part of stimulus package. Accordingly, government has set up EGOM, headed by defence minister and KPMG as consultant. Ordnance factories, interestingly, pre-date both Army and Railways. The oldest OFB factory was set up in 1802, as Gun Carriage factory at Cossipore. Between Ishapore factory remodelled in 1904 as rifle factory and recently set up Russian aided, AK-203 plant at Amethi, there is 116 years of rifle making legacy, yet ironically, we continue to import even basic weapons.

After independence, public sector, venerated as temples of modern India, proliferated unabated till liberalisation and economic reforms. Politicians across the spectrum distributed these facilities in their pocket boroughs, disregarding logistics, skill base and convergence. Coupled with OFB are nine Defence Public Sector Undertakings (DPSU), albeit, on more sound semi corporate management structure. Prime example is armoured vehicle factories in Avadi and Medak, in south even when tanks are primarily deployed on western borders, resulting in avoidable shuttling for overhauling and repairs. This is now being belatedly corrected to some extent. Similarly, components of ammunition shell casing, propellants and fuses are manufactured in different factories, transported for assembly, through lands works & environment (LWE) infested region by primitive means. Unfortunately, trend continues with rotation of defence expo to politically appropriate locations as annual jamborees and even attempts to rotate Bengaluru air show.

Pakistan has adopted different approach in setting up cluster of 14 factories at integrated Wah complex. Despite our propensity to describe Pakistan as failing state, it will be pragmatic to give devil its due. Independent observers feel that POF, Wah, Aviation complex, Kamra and Heavy Industries Complex, Taxila have performed much better, especially in absorbing Chinese technologies. POF products, specially munitions, are in service with 40 countries, with organised branches in Middle East. The moot question is: what makes Pakistan tick in this domain? The possible answers are: accountability under strict military over watch, ‘mistri and jugaad’ culture and above all bureaucrats being kept at arm’s length.

In our case, bureaucrats have converted these white elements into personal fiefdoms. Inefficiencies of OFB have been flagged, repeatedly by CAG and standing committees. A pair of combat dress, ex trade is approximately Rs 2,000 (50%) cheaper, yet who can forget troops wearing OFB uniforms in different hues of greyish OG. They also regularly book orders much beyond their capacities, disregarding capacity audit thereby leveraging it to build even administrative facilities. The only silver lining is vast tracts of land, infrastructure, equipment, selected skill base (like proof testing), which can be monetised to kickstart reforms.

The most serious issue is the total lack of accountability as OFB has a system of self-certification for quality assurance without even Directorate General of Quality Assurance (DGQA) validation. Consequently, every accident leads to passing the blame to users and inadequate storage conditions. It was most distressing to cope up with barrel burst cases in T-72 fleet leading to remarks in an Army enquiry report, “It (the T-72 ammunition) used to burst in the barrel… If the (firer) is afraid to fire his own gun, then even if he sees the enemy he will not fire.” As many as 780 barrels had to be replaced.

It is time, ownership is taken by OFB and serious attempt made to win users’ confidence. The bottom line is: to factor environmental realities and make munitions that are field proof. OFB has to ramp up its capability to absorb transfer of technology (TOT) and undertake product improvements, like all other manufacturers. It is after more than three decades that OFB woke up to fact that it had Bofors TOT, literally gathering dust and Dhanush project was kick started. Both Dhanush and ATAGS projects, green shoots of indigenous artillery modernisation are stalled with barrel bursts, probably due to faulty ammunition, being the most likely culprit. A recent Army report states that it has Rs 960 crore worth of defective ammunition on inventory. Since 2014, in 403 accidents, 27 soldiers have lost their lives and 159 have been injured.

Prime Minister Narendra Modi’s vision of reform, transform and perform mandates that OFB steps out protected comfort zone and becomes accountable, ready to face competition. Corporatisation is just an interim measure, leading ultimately to privatisation. Transformation needs to focus on basic structure of department of defence production, which has resulted in current alarming situation due to symbiotic mediocrity between bureaucrats and production agencies. The new mantra has to be: perform to survive. Above all, follow Mahatma Gandhi’s maxim, A customer (user) is the most important. How about making user the king and meeting their aspirations?


DISCLAIMER : Views expressed above are the author’s own.


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