Current Affairs 2021: Relevance of dedicating new Ordnance Companies to nation

By Rakesh Kumar Sahoo

Recently, 7 New Ordnance Companies were dedicated to the nation. Read here the relevance, pros and cons of the decision.

Ordnance Factory Board is the oldest organisation run by the Government of India. It was working under the Department of Defence Production, which comes under the Ministry of Defence. Ordnance Factory Board comprises 41 ordnance factories having corporate headquarter in Kolkata. It was the primary producer of weapons and military equipment in India. According to recent developments, GOI approved the corporatisation of OFB. Ordnance Factory Board ceases to exist from 1st October 2021. All the 41 factories under the aegis of OFB transformed into seven new ordnance corporations. The government will retain major portions of these companies, but they will have more autonomy in making decisions. The list of new ordnance corporates is as follows:

1. Munitions India Limited (MIL)
2. Armoured Vehicles Nigam Limited (AVANI)
3. Advanced Weapons and Equipment India Limited (AWE India)
4. Troop Comforts Limited (TCL) (Troop Comfort Items)
5. Yantra India Limited (YIL)
6. India Optel Limited (IOL)
7. Gliders India Limited (GIL)

Need for Corporatisation

So, what was the need of the hour for this significant transformation? Revolution in Military Affairs (RMA) is a hypothesis about the future of warfare, often connected to technological and organisational recommendations for military reforms. This concept was visualised by Soviet Armed Forces in the 1970s and 1980s. In this context, Lt Gen H S Panag termed the transformation as Revolution in Indian Military Affairs. Under the leadership of V P Singh, the then prime minister of India, the Arun Singh Committee on Defence Expenditure (CDE) was set up in 1990. This report suggested major transformations. High-level committees like T K A Nair committee (2000), Vijay Kelkar Committee on Defence reforms (2005), Raman Puri Committee (2015), Lt Gen D B Shekatkar Committee have identified the need for this.

The Indian army carried out four different studies in 2018 and approved a mega plan of transformation. Under the present context of the security issue with China, we need a robust supply chain and modern warfare to tackle it. This can only be achieved with competition in the market. To access this competitive environment, it was needed to transform these rigid bodies into more flexible entities.

Prior to this, the Indian army was bound to buy ammunition and machinery from these entities only, but now being transformed into PSUs, the Army will have the autonomy to choose the equipment in terms of quality, quantity, time etc. Operating under the Ministry of Defence directly, OFB was stringent and incompetent. OFB was not allowed to retain profit, which was indirectly affecting the R & D process. Poor R & D leads to catastrophic failure of equipment in terms of quality and operation. According to an internal army report, 403 accidents related to faulty ammunition since 2014 led to a loss of INR 960 crore. Comptroller Auditor General (CAG) of India has also raised concerns regarding the productivity and quality of the arms and ammunition produced by these companies. CAG has also pointed out the time delay in delivering the order by these entities. These entities lack in terms of operational freedom and flexibility. So, all these collectively lead to the point of transformation.

Atmanirbhar Bharat is an umbrella concept about making India an important and major shareholder of the global economy. So, along with the need, this was the future dream of the ruling government. The Ruling Modi government pointed out 167 transformative ideas with a target time of 100 days in their manifesto. The military transformation was one of these ideas. Our armed forces are actually behind their types. They lack integration among the different wings. We have noticed this during the post-Balakot when a large fleet of the Pakistan air force came into the Indian sky to challenge the Indian Air Force. During this, six personnel were killed in a chopper crash due to friendly fire. All this implies the transformation was the utmost need. Maybe this has come a little late, but this could change the fate and combat style of the Indian army.

Pros and Cons of the Decision

As like every other decision, there will also be some boon and bane. Major advantages of this decision are that it will bring competition, increase the efficiency of the new DPSUs and price discovery. The recent transformation will lead the 7 ordnance corporations to retain profit like other PSUs and invest it in their infrastructure, technology, quality development. They can now dedicate their energy towards R & D. Central authority and answerability will be major factors for the advancement. Replacing the OFB into corporate entities brings these ordnance factories under the purview of the Companies Act. All this will bring visibility and clarity to the operating process of these companies. Further public-private partnership is the future milestone for these corporations. Flexibility will empower these entities for the internal transformation of technology and research.

But there are concerns that by privatising the defence sector, the security of India would be compromised. The major concern is about the employees of these entities. OFB had 80,000+ employees working for these companies. But the government assured that the employees will enjoy the same benefits as before and also passed Essential Defence Services Bill, 2021 to prohibit strikes, lock-outs and lay-offs in units engaged in essential defence services. The seven entities formed under this improvement are Munitions 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.

Indian armed forces, in its firm bureaucratic structure, keep hold of old traditions and treasury. But with the current advancement in technology and warfare, transformations like modernisation and corporatisation were needed for the Indian Military system. We still believe in fleet movement warfare, which was last used in the 1973 Yom Kippur War between Egypt and Israel. It is not a secret to the world that to tackle future security crises, we need modern technology. So, the government is taking bold steps to revamp the Indian army, but these steps are only pebbles in the vast sea. Along with these, we need a lot more sophisticated planning to be among the top world defence powers. These ordnance factories are the face of the problem, while experts say that the root of the problem is research institutes like DRDO. So, a top-to-bottom transformation approach is needed.

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