Defence public sector productivity less than one-third of private sector

The defence ministry revealed in parliament on Monday that the worker productivity of its nine Defence Public Sector Undertakings (DPSUs) ranges from Rs 17.16 lakh per employee per year, in Goa Shipyard Ltd (GSL), to Rs 58 lakh per employee per year, in Bharat Electronics Ltd.

The average productivity of employees across the nine DPSUs is just Rs 38 lakh an employee per year.

This is a fraction of the productivity of some private sector companies that are jostling to enter defence production. In Bharat Forge's Pune facility, 4,000 employees generate a turnover of Rs 4,000 crore, giving employee productivity of Rs 1 crore per annum. Tata Power, an increasingly visible player in defence, generated a revenue of Rs 9,500 crore in 2011, with 4,627 employees, with each employee generating more than Rs 2 crore of revenue. (PERFORMANCE AUDIT)

Despite the low productivity, the DPSUs pay out a significant amount as overtime. HAL had the largest overtime payout, with Rs 8,664 lakh paid to some 32,644 employees. Goa Shipyard, with the lowest employee productivity, paid Rs 1,167 lakh to 1,596 employees, adding up to over Rs 70,000 per employee per year.

All these figures were presented in Parliament on Monday by the defence ministry in response to written queries from members.

In a belated recognition of the advantages of the private sector, the recently cleared Defence Procurement Policy of 2013 has modified procurement rules to harness the private sector in defence production. Private sector defence companies will now get access to the military's long-term equipment roadmap, providing them with a level playing field with the DPSUs. The "Buy & Make (Indian)" category of procurement has also been simplified in order to bring in more private sector companies.