Why Corporatisation of Ordnance Board is a must

On 16th May 2020 the Government announced the decision to corporatize OFB to improve its autonomy, accountability and efficiency. It evoked overwhelming response from the Armed Forces who felt that the step was overdue but suboptimal. Almost everyone wanted the OFB to be privatised on a PPP model. Simultaneously there were discordant notes from within OFB. The feedback indicated that the management and unions were both against the corporatisation decision. Thereafter the MOD started the process of hiring a consultant to prepare a corporatisation roadmap. Unions have opposed the move and have given a notice to go on strike from 12^th October 2020. These events are happening when the Sino Indian situation is tense with a likelihood of conflict escalation.   

There is absolute clarity that OFB is beset with major problems. The foremost amongst them being poor quality, high cost, total lack of accountability, inordinate delays and a very poor work culture. The Armed Forces have never been satisfied with the output of the OFB. Very specifically the ammunition produced by the OFB is often unreliable, unsafe and has lower than specified shelf lives. Resultantly huge quantities of ammunition are destroyed or rendered non-operational. It adversely affects operational readiness.  National security is jeopardised. This situation is unacceptable. It must be arrested.  There is no doubt that reforms are necessary.  Past government committees even recommended full privatisation and breaking up of the OFB. Corporatization is the minimum reform.   

It is unacceptable that OFB unions are preparing to strike work when the nation is almost at war. This is the time when they should be standing behind the Armed Forces and ensuring that frontline soldiers have enough clothing, ammunition, weapons, guns and missiles to fight adversaries. The government should ban such strikes at this time. Are the workers being instigated by party politics or forces inimical to the nation? Is there a China hand behind the strike? There is obviously more to it than meets the eye. The worker unions should reflect – can the Armed Forces go on strike due to delayed supply of substandard ammunition and other warlike stores?  

OFB has not improved despite huge effort in the past at internal reform. If this situation continues, the Armed Forces will refuse to use substandard OFB products.  Increasingly the Government will not be able to place orders on OFB on a nomination basis. If corporatisation is resisted, may rely on private sector to meet its needs. There is no choice. The management and the workers of the OFB need to see corporatization in the correct perspective. Corporatization does not mean that their jobs are being taken away or their livelihood is at stake. The idea is to improve the efficiency and image of the OFB; which is at the rock bottom. 

There is a requirement for dialogue with the OFB as a whole. They should be explained the intent and necessity of corporatization. It means turning the hidden potential and strengths of OFB into a competitive profit system through better work culture like other DPSUs. It will actually benefit everyone in the long run. If OFB must export weapons, there is definitely a requirement to improve its image internationally. That is feasible only through reforms.  There are, however, some issues involved. The workers need to be reassured and their fears allayed. Their jobs will not be lost. Reforms will only lead to better and enhanced capacities to result in an Atma Nirbhar Bharat and more jobs. The second issue is to deal with the management which consists largely of the IOFS cadre. These officers might not fit into a corporate entity. Hence some options of lateral entry into other government departments have to be thought of while fresh blood is brought in. 

Appointment of a consultant to recommend the corporatization road map must be done with care. Foreign ones are best avoided. OFB is a huge strategic asset. It has tremendous strengths which should be kept under wraps. Our workers are experienced. Our future plans should be safeguarded. Its transformation will take time. It should be done deliberately, in phases, with care. Reform should be as per our conditions, culture and practices which have strengths. The expertise to reform also exists indigenously. Further, there is considerable pre-corporatisation groundwork required.  Certain structural changes should be carried out even before the consultant comes into the scene. The Board can be given financial powers equivalent to other DPSUs. The OFB can start functioning under clearly visible and foreseen verticals. The Financial advisory and audit system and the QA system can change.  An implementation committee should be appointed to oversee the transformation on a time bound basis. People who wrote previous reports on reforming OFB are still in circulation. They should steer and execute what they had recommended! All stake holders must be part of the reform. Reluctance of workers seems to be the fear of the unknown. A major problem of the OFB is the disconnect and insensitivity to users. A greater connect between the Services and the OFB must commence.  There is a strong case for the DDP (MOD) to be a bespoke organisation. Mere reform of the OFB alone won’t do. MOD must also undergo a concomitant reform.  

The OFB is a national strategic asset with eroded roots. It needs a rebuild. If the rebuilding is done effectively, India will benefit immensely. To quote an equivalent, the ‘’State-Owned Enterprises’ in China used to be called their ‘Rust Buckets’ till the 90s. After reformation, they are now the engines powering China to superpower status. It is time OFB sheds its Rust Bucket image and becomes India’s growth engine.