Home DEFENCE Corporatization of Ordnance Factories: choosing what not to do

Corporatization of Ordnance Factories: choosing what not to do

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Ordnance Factories

On 16th June the Union Cabinet approved a much-debated plan to corporatize the Ordnance Factory Board (OFB) under the Companies Act. The Kolkata based OFB has 41 Ordnance Factories under its fold and is to be reorganized into seven corporate entities on the lines of defence public sector undertakings (DPSUs) based on the nature of manufacturing and technologies. The principal argument of the Government has been that this will give factories the autonomy needed to improve productivity, quality, deepen specialization and enhance competitiveness.

The new DPSUs will be grouped as under:-

  • The ‘Ammunition and Explosives Group’ comprising factories producing ammunition and explosives.
  • The ‘Vehicles Group’ having factories manufacturing tracked and wheeled combat and logistic support vehicles.
  • The ‘Weapons & Equipment Group’ having under it factories engaged in the production of all types of armaments.
  • The ‘Troop Comfort Items Group’ consisting of clothing and equipment factories that manufacture uniforms, boots, mountaineering gear and tentage.
  • The ‘Ancillary Group’ dealing with metal items like forgings, castings, cartridge cases etc.
  • ‘Opto-Electronics Group’ manufacturing all types of sighting systems.
  • The ‘Parachute Group’ with the sole factory at Kanpur manufacturing parachute

This transformation must be carried out with a difference using a new corpus of thoughts. Whatever didn’t work in the past has to be done differently. The transformative process has to be accompanied by a strategic plan; a well-defined roadmap formalised at the MOD on what is to be done. The current entropy is mainly due to the siloed working and absence of strategic leadership at MOD. A conglomerate of 41 ordnance factories and several DPSUs led by visionary leadership, could have made India self-reliant several decades ago.

Atma Nirbhar Bharat in defence has to be strategized at the higher defence management level—- DPSUS, Ordnance Factories, the private sector cannot be left as freewheeling entities, spinning in different directions. OFB has to create the right fit aligning activities of its factories with each other to support the chosen strategy.

Ordnance Factory board
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Strategic Plan- Government Driven

The OFB needs to do an honest introspection by a hard-nosed assessment of what is the root cause for this state of affairs. There must be clarity in choosing what not to do in the years ahead. The easy way out could be the templated approach to adopt practices prevalent in DPSUs like HAL, BEML, etc.

This approach may at best lead to incremental improvements. But if long-lasting changes are to be brought in, a strategic shift is the need. Post Yom Kippur war, Israel which was dependant till then on imported systems made the shift by focussing on industrial capabilities and competent scientists, engineers and technicians.

The growth of the defence industry was achieved by a blend of imported technology and Israeli innovation. Israeli firms purchased manufacturing rights and entered into collaborative ventures with foreign companies to manufacture full systems and components mostly with Government support. The emergence of Government-owned conglomerates like Israel Military Industries (IMI), Israeli Aerospace Industries (IAI), Rafael Advanced Defence Systems along with a host of private companies, illustrates how a well planned and efficient government intervention can facilitate the establishment of a versatile defence industrial base and consolidate technology security. It is time the MOD takes a leaf out of Israel`s success story, sets the course and evolves a strategic plan – a well-defined roadmap on what is to be done. If need be a team of MOD bureaucrats can undertake two case studies—- the emergence of Israel`s IMI, IAI and the fate of Royal Ordnance Factories (ROF) post-1985. The strategic direction set now will decide the fate of Ordnance Factories in the next two decades.

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Organization Culture

Corporatization should commence with the shaping of organizational culture. A shared belief that DPSUs are an extension of the military and that their products are for securing India. They need to convince themselves that they constitute the cutting edge because, without fail-safe and mission capable weapons, the armed forces cannot remain operationally effective. Not easy to accomplish, given the divergent and frequently drifting requirements of the main customer, the Army where the preference remains for systems crafted offshore. They may have their reasons, mostly unjustifiable as a life cycle view is almost missing. I have repeatedly stressed that merely acquiring a weapon system is not enough, it has to be kept in a mission capable status 24×7. No point in possessing systems that cannot be maintained as per OEM norms. One ends up having a medley of equipment that gives an impression of an operational capability, which it is not there, a collection of stragglers. Given the security landscape, the military cannot afford to bank on foreign systems to defend India.

Organizational culture is a big challenge in Government enterprises as it is difficult to build ownership and alignment in the workforce to implement a change. There is an overall deficit of ethics, values, practices and working environment to develop high workplace morale and highly productive staff. Cultures could be collaborative, innovative, high performing, trusting or transparent. I would recommend a collaborative and trusting work culture for these newly formed entities, where they understand the larger corporate aim —- Defending India, not maximizing profits and work towards gaining the trust of the military, the way shipyards have earned the trust of the Navy. The shipyards ably led by Naval Engineers have since the seventies when the Leander class frigates were indigenously produced have shown a strong competence for absorbing transfer of technology and then innovating to craft out indigenous designs. Yes, there may have been delays, cost and time overruns, but seldom has there been any significant issue of performance.

A similar approach if adopted for Ordnance Factories may usher long-lasting changes in organizational culture. The uniform certainly promotes a culture of ownership, our unit, our ship, our squadron, our factory. If an armed forces engineer has been a part of the manufacture, he or his colleagues will leave no stone unturned to keep the platform fighting fit through life. We notice this work culture in the Army Base Workshops day in and out. During the pandemic and the LAC standoff, 55 -58-year-old technicians when told not to come for duty as a welfare measure, declined and were present throughout, rolling out combat vehicles, guns, radars, etc. It is a different issue that the Army hierarchy disowns them and stigmatizes them as “The Tail”. Despite all the criticism, reservations and cavilling, no one can take away this spirit from these civilian techno warriors. They work for defending India – India is forever.

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Collaborative Strategy

The Ordnance Factories need to revisit their people, process, technology (PPT) framework to reinvent themselves. They need to show the door to some self-styled specialists who prefer to frequently deviate from the OEM`s process documentation, replacing them with people possessing next-generation competencies. There is a need to develop a collaborative strategy with meaningful public-private partnerships instead of trying to do everything under one roof. The competitive approach adopted at present is a sheer waste of national resources—– making several public and private companies develop prototypes like a light tank or FICV and evaluating these to select one, over several years of testing and trials. It has been noticed in some recent trials conducted that wherever three to four Indian vendors are in the fray, they end up pulling down each other, satisfied with the programme failing eventually, rather than allowing anyone else to succeed. It may be beneficial to allow vendors to collaborate rather than compete.

The combined might of the Government, scientific community and industry should be put behind a single design to achieve system maturity and system readiness to deploy in compressed time frames at affordable costs. Core competency-based workshare can be earmarked for vendors. This approach will help shape the industry to become globally competitive and self-sustaining. A rich knowledge base to manufacture complex weapons and munitions is only available with Ordnance Factories, acquired over several decades. The private sector will take years to develop this knowledge cache. It needs to be consolidated not dissipated by Ordnance Factories assuming the role of systems integrators and industry the role of subsystems providers. This will scale up production, downsize the workforce by 30 -40% and build in quality. A tank engine assembled under the aegis of Tata Motors or Mahindra or Ashok Leyland or an automatic loader assembled by Tata Power will be a few notches better than what the Russians can offer cost and durability wise. It is simply due to a culture of deep engineering and innovation adopted in these organizations.

Finally, I will end on the note that the Government`s initiative to corporatize the Ordnance Factories is a forward-looking move in sync with the times. It has the potential to transform the Indian Defence Industrial Base if guided by visionary leadership. It can turbocharge `Make in India` and provide the Indian military, equipment capability to address multiple threats to national security. Ordnance Factories are now at a crossroads. The choices they make can enable them to trailblaze the IMI-IAI route and create a unique and valuable position or go the ROF way.

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Lt. Gen. (Dr.) N. B. Singh, PVSM, AVSM, VSM, ADC
Lt Gen N B Singh served as Director General of the Corps of Electronics and Mechanical Engineering (DGEME), Director General Information Systems (DGIS) and was a founding member of the Armed Forces Tribunal, Jabalpur. He specializes in armored fighting vehicles and played a key role in the design and development of bullet proof vehicle Takshak, Arjun Armored Recovery vehicle and made significant contribution in the development of the Dhanush gun system. He has undergone specialized training in Germany on off highway vehicles and served in Moscow as Military Attaché Technical.


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