Products from protesting factories lack quality: MoD

All India employees take part in a protest rally against the Central government over the proposed privatization of 41 ordnance factories in Jabalpur. (PTI Photo)

A day after labour strike began at 41 ordnance factories, defence ministry officials blamed ordnance factories of delivering poor quality products, charge the customers high for such products and function with low productivity.

“Ordnance factories were set up as captive centres to serve the needs of the armed forces. But they have been facing the performance issues for a long time. Poor quality of Ordnance Factory Board products was a constant cause of concern,” sources in the defence ministry said.

Officials said there was no question of privatising the OFB units. The proposal on the table is to transform them into 100% government-owned corporate entities, registered under the Companies Act, 2013 to improve their “functional autonomy.”

Currently, the OFB is a subordinate office of the Department of Defence Production because of which decisions like the modernisation of plant and machinery, entering into a joint venture with other firms and technology transfer agreements are subject to government rules.

‘Push for profit-making’

Being a government department, OFB can’t retain profits and therefore has no incentive to make profits. All such factors reduce its operational flexibility that is generally associated with any production and marketing unit.

A change, sources said, would bring areas like R&D, quality control and financial accounting directly under the management of ordnance factories that will be free to take policy decisions on areas like market expansion and technology upgrade.

The government officials argued that at least two expert committees – one headed by T K A Nair in 2000 and a second one chaired by Vijay Kelkar in 2004 – recommended the same.

A third panel (Raman Puri committee formed in April 2015) too observed that it was essential to change the current functioning of OFB as an attached office of the defence ministry and a budgeted entity as it is completely incompatible with the modern methods of production and quality control. It also recommended converting the OFB units into DPSUs.

Strike a success

The trade unions spearheading the strike, on the other hand, claim the government move would lead to the privatisation of the OFB causing hardship to the employees.

They said successive government, including the Narendra Modi-led government in its first innings, had taken a stand not to corporatise the ordnance factories but the new dispensation decided on the contrary.

The unions claimed defence production has been scaled down to zero in 41 ordnance factories across the country and strike was “total success”.

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