OFB corporatisation alone won't make India more 'atmanirbhar' in defence

PM Narendra Modi has launched the seven new defence PSUs carved out of the Ordnance Factory Board. In an interview with Business Standard, defence expert Ajai Shukla explains what will change

In what is seen as the end of a chapter in India's military history, which began over 200 years ago during the British rule, Prime Minister Narendra Modi on Friday launched the seven new defence public-sector undertakings carved out of the Ordnance Factory Board (OFB).
 
The defence ministry had in September dissolved the OFB with effect from October 1 and transferred the OFB's employees, management, and assets to these seven PSUs. In other words, the OFB has now been corporatised. But, does what comes in OFB’s place move India towards greater self-reliance in defence? Will this structural change alone be enough to put an end to the inefficiencies – mostly delays in delivery and poor quality of products – which plagued the erstwhile OFB?

 
In an earlier column for Business Standard, defence expert Ajai Shukla offered an answer based on what several analysts had said: "Greater efficiency is unlikely to materialise as long as the new manufacturing entities that replace the OFB are structured with the same inefficiencies as their predecessors."
 

THE OFB STRUCTURE

• 41 Ordnance Factories
• 9 training institutes
• 3 regional marketing centres
• 4 regional controllers of safety

AT A GLANCE
 
People employed: 76,000 workers across 41 Ordnance Factories
Production: Rs 11,500 cr of defence stores produced annually
Per capita production: Rs 15 lakh a year
What govt wants: Good production volumes
OFB’s strength: Surge capability*

Argument against: Military's budget should be used on quality defence products, not just to keep surge capability alive
 
* Surge capability ostensibly meant that the OFB could meet any sudden requirement for large volumes of defence products, say in the event of a war

 
According to reports, the Ministry of Defence has converted all pending orders with the erstwhile OFB's factories into deemed contracts worth over Rs 65,000 crore for the seven new companies. 
 

THE SEVEN NEW DEFENCE PSUs
 
1. Munitions India Limited: A grouping of the 12 Ordnance Factories, or OFs, that produced explosives and ammunition

2. Armoured Vehicles Nigam Limited: The five OFs that built vehicles
3. Advanced Weapons and Equipment India Limited: The five OFs which manufactured weapons and equipment
4. Yantra India Limited: Formed by combining the eight OFs that manufactured metals and steels
5. Troop Comforts Limited
6. India Optel Limited
7. Gliders India Limited
 
Note: The remaining 11 OFs have been turned into the last three PSUs

 
In this interview with Business Standard, Ajai Shukla explains the latest development and what it might change.