Corporatization of ordnance factories needs to be reversed


Report by Kamgar Ekta Committee (KEC) correspondent


From the recent 38th Standing Committee Report on Defence (2022-2023) it becomes even more clear that the real objective of the corporatization of ordnance factories is to privatize them. As a first step towards that objective, ordnance factories are being starved of orders. They are not being allowed to participate in tenders so in order to encourage the private sector. Within a few years most of the ordnance factory corporations will be sick enterprises. The government will then use the poor financial condition of these corporations to sell them at throw away prices.

The stated objective was “the restructuring of erstwhile OFB (Ordnance Factory Board) into newly created DPSU’s is aimed at transforming Ordnance Factories into productive and profitable assets, enhance competitiveness and improving efficiency. With more functional and financial autonomy, these new DPSU’s would explore newer markets both in the country as well as abroad.” This was only meant to seek support for the corporatisation. What is being done within one year of the corporatisation is exactly the opposite of what was stated.

The report reveals that the order book position for the newly created 7 DPSU’s carved out from the erstwhile OFB for the next 5 years is very bleak. The order book position for the year 2023-24 for all the 7 corporations put together is 16,694.58 Crores only. While corporatizing the Ordnance factories the government had claimed that doing so the ordnance factories would make them have order books worth of Rs. 30,000 Crores!

The orderbook is comfortable only for the corporations MIL and AVNL, whereas the AWEIL with 8 factories is having a load of only Rs. 1915 Crores. The TCL and YIL are in worst position as the TCL with 4 factories is having only orders of Rs.88.89 Crores and YIL with 8 factories has orders of Rs.700 Crores. The MIL is not having any workload beyond 2025-26.

With the Army stopping to give direct indents to the Ordnance Factories and going to the private sector through open tender, the fate of the all the 7 corporations is going to be at stake. Recently, the Army floated an open tender for procurement of 12 lakhs newly designed Army uniforms and by imposing restrictive conditions the 4 Ordnance Factories under TCL are not allowed to even participate in the tender. The Army has decided to purchase 350 Nos. of the Combat Free Fall Parachute System (CFF) from private producers, ignoring the Parachute Ordnance Factory which is under the GIL corporation.

Ordnance factory employees and their unions have been opposing the corporatization from the day it was proposed, realising that it is a step towards privatisation. Recently, All India Defence Employees Federation (AIDEF), Bhartiya Pratiraksha Mazdoor Sangh (BPMS) and Confederation of Defence Recognized Associations (CDRA) submitted a detailed note to the Department of Defence. They want the government to reverse its decision of corporatizing the ordnance factories and restore the status of the ordnance factories as departmental organizations under the Ordnance Factory Board. They also want the government to implement the valuable suggestions given by the employees’ organizations to achieve Rs. 30,000 Crores worth of production.

Privatisation is the agenda of the ruling capitalist class headed by big monopolies. Successive governments have shown that they have to implement this agenda. After all it is the biggest corporates who fund these parties during elections so they have to implement their agenda after forming the government. We should not be taken in by the various justifications given by governments, for it is a part of their job to try to fool us and accept steps leading to privatization.



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