THE MEGA ORDNANCE MAKEOVER

CAN THE RESTRUCTURING OF 41 ORDNANCE FACTORIES INTO SEVEN NEW DEFENCE PSUs GIVE INDIA’S DYSFUNCTIONAL MILITARY-INDUSTRIAL COMPLEX A NEW LEASE OF LIFE?

- Sandeep Unnithan

INDIA’S HIGHEST DECISIONMAKING committee on security affairs, the Cabinet Committee on Security (CCS), fired a starter pistol on June 16. The CCS okayed what could be the most extensive and complex shake-up ever of the country’s defence industrial production base—the restructuring of 41 ordnance factories into seven fully government-owned corporations by next year.

The move aims to jumpstart productivity in these factories that have a combined net worth of around Rs 80,000 crore, employ 70,000 people and together constitute the largest government department in the world. The factories manufacture battle tanks, infantry combat vehicles, rocket launchers and artillery gun systems primarily for the Indian Army. But with no innovation and a dwindling product portfolio over the years, they have failed to reduce India’s crippling dependence on imports or add heft to diplomacy by supplying indigenous weapons for export.

The seven proposed defence public sector undertakings (DPSUs) will add to the existing nine, such as HAL (Hindustan Aeronautics Ltd) and Mazagon Dock Shipbuilders Ltd, that supply fighter jets, helicopters, warships and submarines to the air force and navy. The DPSUs will form the world’s largest state-owned military-industrial complex, after those in Russia and China.

The ministry of defence (MoD) has begun recasting the 41 ordnance factories into seven DPSUs based on their products (see Betting on the New DPSUs). The Kolkata-headquartered Ordnance Factory Board (OFB), under which the ordnance factories function, will be dissolved. “The OFB is like a joint family. In a joint family, everybody is responsible, yet nobody is responsible. We’re now creating seven nuclear families,” says a senior MoD official.