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PM Narendra Modi’s 28 June Mann Ki Baat sets the tone for corporatisation of ordnance factories

New Delhi: A reform prerequisite for India to become “Atmanirbhar” in the field of weapons production has been put on anvil within a week of Prime Minister Narendra Modi’s “Mann ki Baat” of 28 June. The government on 6 July sought bids for the selection of a consultancy service agency, which will assist the Department of Defence Production in the corporatisation of the Ordnance Factory Board (OFB). This was a major reform announced by Finance Minister Nirmala Sitharaman on the third day of her marathon five-day press interaction in mid-May. She had stated that OFB will be corporatised and envisaged that one or more entities, which will be PSUs listed on the stock exchanges, will be set up, which will be tasked with speeding up the “Make in India” process and be part of the Prime Minister’s “vocal about local” campaign.

In his 28 June broadcast, PM Modi said, “Friends, before Independence, in the realm of the defence sector, our country was ahead of many countries in the world. There used to be a multitude of ordnance factories. Many countries that lagged behind us then, are ahead of us now. After Independence, we should have made efforts in the defence sector, taking advantage of our prior experience…we did not. But today, in the fields of defence and technology, India is relentlessly endeavouring to advance on those fronts…India is taking strides towards self-reliance”.

India’s 18 ordnance factories provided sinews to the Allied endeavour in the Eastern Sector during the Second World War. Not only Indian soldiers but the effort of India’s defence workmen contributed significantly to the war effort. During partition, all 18 units remained in India. Post-Independence, Nehru’s pacifism was reflected in the decline of attention on munition production. In the years leading to the 1962 debacle the ordnance factories continued routine production of traditional arms and ammunition. Vehicle manufacturing was added to its kitty with tie-ups with Germany’s MAN and Japan’s Nissan—the Shaktiman trucks and versatile Jonga jeeps emerged. Earth moving equipment for the Dandakaranya project were made by OFs. India’s first air-conditioning equipment and high capacity pressure cookers (for troops) were also made.

The 1962 setback saw the setting up of Department of Defence Production—the then Director General of Ordnance Factories, Rear Admiral Daya Shankar, was promoted and appointed Controller General of Defence Production—precursor to the present post of Secretary (Defence Production). Working in tandem with defence research laboratories and in-house reverse engineering by OF technologists a semi-automatic rifle was developed at Ishapore and the Indian Field Gun and Mountain Gun emerged by the time India was engaged in its next war, in 1965, with Pakistan. In 1971, apart from Soviet supplies and surreptitious Israeli munitions, India’s indigenous munitions were the mainstay of the armed forces. Post 1971 India exported munitions primarily as aid to the liberation struggles in Africa. Janes Defence Weekly listed Indian equipment as testimony to their efficacy. It is this glory, which evaporated after 1980s with dependence growing on imports and inability of OFs to live up to their past excellence, which perhaps prompted Modi to make a reference to ordnance factories in “Mann ki Baat” and set in motion the process of revival.

In April 1979, following recommendation of a committee headed by former Hindustan Lever Chairman, Vasant Rajyadhaksha, the Ordnance Factory Board was created—a semi-corporate entity, which continued as a wing of the Department of Defence Production. Prior to that, OF expenses were dovetailed to the Armed Forces budget. The financial autonomy delinking from forces’ budget proved to be a nadir as OFB could not live up to competition in terms of pricing.

Also in 1979, a Field Gun Factory was set up in Kanpur to augment the capacity which existed in another factory in the same location. It was rated as the best engineering unit of its kind East of Suez—the Indian version of Bofors gun, “Dhanush”, which showed its prowess in Kargil, is made here. In 1980s, a tendency to import rather than produce at home became the paradigm of defence procurement. Scams like HDW submarine deal and Bofors ensued—bringing in their trail a paradigm change in India’s political horizon itself. Three decades of political instability was perhaps reflected in decline of indigenous procurement and reliance on imported equipment. So much so that India, which has the third largest defence budget in the world, is dependent 60% on imports today. The advent of a new regime and emphasis on “Make in India” in 2014 should have seen increased reliance on home munitions, but it has taken six years for reform to impact this strategic sector.

The consultancy firm, once selected, will have a year’s time to submit its report. One hopes the fate of this consultancy will not be similar to the ones of the Air India-Indian Airlines merger or that of the conversion of Telecom Department of P&T into BSNL and MTNL.

OFB can trace its history to the days of the East India Company—in 1775 a Board of Ordnance was set up in Fort William, Calcutta. In 1787, a gun powder factory was set up on the banks of Hooghly river in Ishapore, 25 miles north of Calcutta, adjacent to India’s oldest cantonment, Barrackpore (where Mangal Pandey lit the flames of the 1857 uprising). In 1801, a gun manufacturing unit was set up at Cossipore, north Calcutta. In 1899, a Hague declaration had to be issued internationally banning the lethal Dumdum bullets which were made near Calcutta.

India’s ordnance factories had an umbilical link with the British Royal Ordnance Factories (ROF), which were corporatised in 1985. Royal Ordnance plc, the listed company which ensued, was merged with British Aerospace in 1987 and BAe Systems, an integrated defence production giant emerged. OFB has 41 factories situated over 24 locations which have large land pool, industrial and residential and attendant medical facilities. In Britain, the First Division football team, Arsenal FC, is perhaps the most visible remnant of ROF (it was set up by munitions workers of Woolwich in 1883). The land estates of ROFs are redeveloped into better productive use, while factories are efficiently producing weapons and equipment under corporate ownership.

While reforming defence production the Modi regime may like to study the British model as well as take an omnibus view by looking at the United States’ DARPA—Defence Advanced Research Project Agency—which is tasked with making pivotal investments in breakthrough technology for national security. DARPA was set up in 1958 by President Eisenhower after Soviet Union shot its Sputnik into space in 1957. Narendra Modi’s 28 June “Mann ki Baat” can be India’s Eisenhower moment if the mandate is extended beyond corporatisation of Ordnance Factory Board.