Corporatisation and restructuring of Ordnance Factory Board is a very important Defence reform that is taking place. If handled correctly It will end up making India self-reliant. The way it has been done by a host of countries that managed it with a firm strategic direction, for example, take the case of Israel, in 1973, after the Yom Kippur War. Both India and Israel were in the same condition. We were using similar weapon systems, centurion tanks and seeing what has happened since the past 40 years, there is a stark difference between the defence capabilities of both countries.
I have a little advantage in the sense that I have been on the other side, seeing the production of the same equipment as it is done in Russia and then comparing it with what was happening in Ordnance Factories. I will be referring to these differences at certain places to drive home the point.
As far as the restructuring is concerned, the decision has been taken. These 41 companies will be restructured into 7 corporate entities generally on the lines of what has happened in DPSUSs, the reason which the government has given is that possibly more autonomy will improve their competitiveness, productivity, and maybe lead to better quality along with deep specialization.
As we mentioned by the commencement speaker, these have been in existence since 1775. So it is now virtually the 246th year. They have been meeting most of the principal requirements of the armed forces, especially the army.
However, they came under criticism for quite some time, possibly the last 2 decades. They have been under criticism because of time plus cost overruns and the quality of products being produced.
The late 90s was a time when the chairman of the Ordnance Factory Board and his complete team should have taken note of this. As that was the time when opportunities were available in Eastern Europe, he should have taken note of it to remain competitive in this changing Technological and economic environment, he should have gone in for Large scale modernization, Creating a futuristic product line and investing in next-generation competencies.
A visit to most of the factories indicates that the way the Soviets missed the silicone revolution, Ordnance Factories seems to have missed the IC revolution.
We just have replicas of those Soviet-era huge estates; a lot of shared, some of them unused with hardly any modernization. This change would have happened at Kolkata and simultaneously at the factory level. At the grassroots level, they also faltered. They did not absorb technologies. The transfer of technology was not properly done. I’ve been witness to more than 500-600 people coming for the T-90 TOT transfer. They were sent to almost all corners of Russia. They stayed there and learned on the job. They should have come back and copied that whole process in letter and spirit. That is what was required. That was not done!
If you see today, leave alone the T-90 tanks, but other products, which have come in earlier, even today after 30 years, 20 years of manufacturing, there are very strong dependencies on Russia as a result of which they do not have any control on cost and time overruns. I mean, take the case of a stabilizer. I remember the kind of negotiations used to go on there for the cost, from $80,000, coming down to $60,000 to $50,000. if you do not have control over vitals, then obviously you cannot guarantee to the user, the availability of the system on time as well, as at the cost at which it was contracted.
What is more intriguing is that a large number of platforms, For which the TOT came in the late eighties or early nineties today, even if you compare it with the original equipment, you will find that certain systems are not there. This kind of practice indicates that what was it was a kind of a status quo approach that thinks that ‘okay, We have a captive customer base. So whatever we produce, they have to accept. What is surprising is that they accept all this. I remember in 2003-04, the tanks were coming without the sights. That was the state.
But the problem came when this whole problem spread to ammunition, it started resulting in accidents. I was based at Suratgarh. I remember most of the units would come there for firing. The kind of accidents which used to take place, and that’s the time when Ordnance Factory Board should have then said, ‘okay, now it’s a wake-up call. Let’s do something.’
But then a lot of time was lost in just passing on the buck. Army making some allegations and Ordnance Factory Board trying to counter them. This is the history as to why all this has happened, we all feel that it’s a good step, which has been taken.
But what is important is that it’s just not going to happen simply because you have now created 7 DPSUs because my experience with the DPSUs which we have the ones, which are supporting the army, is that the situation there may be a little bit better, but otherwise, it is nothing much home to, right!
This approach, if they just go about, because this is my fear that a typical bureaucratic approach is that ‘OkayLet’s follow what DPSUs are doing”. In that case, it may bring about some kind of incremental transformation. Well, they still have some orders, so they will end up completing these orders. They may still get some orders by nomination in the next 4 or 5 years or maybe 6 years.
But then at the end of 15 to 20 years. It will be a full stop. Therefore, I feel that if we want to draft out productive, efficient organizations out of this change; then there has to be a strategic shift. There has to be a lot of thinking, which has to be done now at the Department of defence production level because earlier possibly Ordnance Factory Board could have done it, but now that these are all going to be 7 separate verticals. This job has to be done by the Department of defence production, for which they are not adequately staffed.
If we say that Ordnance Factory Board is being corporatised then the Ordnance Factory Board needs to have our organisational culture. It’s very difficult to ensure that the workforce aligns with a vision. How do we do it? I feel there is a ray of hope. If you look at Brahmos, both are also DPSus, one directly under DRDO, the other under department defence production. You do find that their performance is better. The Navy still trusts them and the armed forces trust Brahmos. Why is it that it is? Because I feel there is a firm belief in these organizations that they are not the tale. They are very much at the cutting edge because without reliable weapons systems the armed forces cannot win the war. After all, they need mission capable systems to perform in battle. If this belief is there, we are at the cutting edge. We are not part of the tail. Then, the process of transformation with the start.
Because this will lead to high morale at the workplace, we have seen this in our army base workshops. I mean the time when things were really hot at the LAC, you should have seen these boys. There were 55-58-year-old technicians, Who had told us that they were having some kind of comorbidities. Please do not come, we will manage.
But they said ‘no, I’ll come, I have to retire just after 2 years, so let me do my duty now’. This is what is workplace morale! If you can achieve it with our civilians in the army base workshops if the same can be achieved by naval officers in the shipyards, same can be achieved in Brahmos, then I suppose this can also be achieved in the DPSUs, provided the leadership thinks about it. I will recommend a collaborative and trusting work culture. A collaborative work culture with the private sector, so that this business of trying to do everything myself will end. Subsystem levels must be handed over to the private sector to assemble, build up and provide to the DPSUs.
Similarly, in trusting work culture, the Navy trusts the products coming out from the shipyards. That is why repeated orders are placed with the shipyards. There are 46 ships of various kinds, which are on order. There is somebody in the Navy who is doing long-distance planning.
It’s a good thing that the Navy is in a position to design its weapons systems. This mutual relationship of trust should be built up, which was not there with the Ordnance Factory Board.
The most important thing for the new DPSUs will be to focus on the 3 important issues of people, processes and technology. People are very they need to create a pool of technicians with next-generation competencies. They need to allow highly trained technicians from the armed forces (Army Navy Airforce) to join them Post-retirement because these guys have been trained abroad and nobody can have a better system’s view than these guys. On the shop floor, when you are manufacturing systems, you have a very siloed view as somebody is only assembling the gearbox so he has a view of that. Somebody is in the engine so he is only restricted to that. These technicians who work in the armed forces have a complete system’s view. Therefore it is very important to use their services and define the assembly stage at the stage of testing. Because they will come in very handy there as well as for support when the system gets deployed.
Apart from that, when these people join them, they will bring with them the collectivist culture of teamwork and loyalty, which I find a mission missing from their civilian counterparts.
And they can provide the moral compass for their juniors to pick up competencies and to excel. I feel this is one very good way. You do find this in the shipyards. There are no naval officers at the top. There are retired naval officers who are at the deputy general manager, general manager level. There are a lot of technicians who have joined the ranks as craftsmen. This is something which needs to be done. This was done by the Israeli industry also because they had the advantage of a lot of ex-servicemen leaving the IDF every 2 years, and coming back into the civil teams. Today, if you meet people from IEI, Rafael etc, you come across a lot of guys who have worked in the IDF. Today now they are in the business of manufacturing weapons.
Next comes, of course, the process. This is where I feel the maximum damage was done, it was done because there were frequent deviations in the manufacturing process, materials. There was a lack of cleanliness on the shop floor. I visited the assembly line where the Arjuns were assembled and when I compared T-90s being assembled and when you compare it with what was being done In Russia, there was a world of difference. Those people had many difficult conditions because for 6 months in a year Nizhny Tagil was full of snow. But yet they kept their work areas spick and span.
Ordnance Factory Board has generally shown an inability to strictly follow the process documentation. Once the OEM has given you this supporting literature, it is very important to follow it and any deviation that must be only after explicit okay is given by the OEM. it should not be done at the local level, whatever be the constraints. If it means delaying production for a year, do it but do not give these because you are dealing with weapons systems. you are dealing with. Systems on which national security depends, on which the life of people who are inside that complex defence.
While the leadership in the Ordnance Factory Board had been technology savvy, We will have reached the stage where 20, 30 years down the line you are making the weapon in the same obsolescent configuration. One simple example – if around 2003-04, after the OFB teams had visited Russia, and they had been exposed to T-90 as well as to the upgraded T-72, which was shown in 2002 at the Expo at Nizhny Tagil. The T-72 was virtually like the T-90. had OFBs offered to DGMO that they will make the T-72 missile capable at the time.
If Ordnance Factory Board would have come on their own and for them, it was very easy to do it. Imagine this simple change of capability enhancement in the T-72 would have led to changes in the fire control system, onboard electronics, stab system, all the sights, and you would have had a T-72 modernized at one third the cost of T-90, but this was not done. This was another opportunity that was missed out by OFB simply because the leadership was not tech-savvy, they did not keep them abreast with the things which were happening all around the world.
This culture of innovation, to adapt foreign designs and to adapt foreign developments to the Indian condition is also missing in the Ordnance Factory Board.
This is, as far as the grassroots level working is concerned now, coming to the ministry of defence, I feel that this transmitted process has to be led by the Department of defence production. If they just leave these 7 entities as freewheeling devices, well, all I can say is that 5 to 7 years down the line, three of the verticals will not be there because in any case one vertical has only one Factory under it, another one has got two and one has got some 3-4 of them. Clothing, electronics and parachute see very little future for them.
Coming to these 4 major entities, if a strategic direction is not given to them. Then possibly, I see them there for the next 15-20 years. They will be there for the next 15-20 years because the government has said that they will not change the service conditions of the 70,000 employees and this direction was not provided by the Ministry of Defence. Had it been provided to these 41 ordnance factories and 9 DPSUs, we would have been self-reliant like Israel possibly 20 years back.
But anyway, it’s not too late. The ministry has to come out with a defence technology strategy and a defence industrial strategy giving out the general line of direction, identifying capability gaps in the Indian military-industrial complex as such what is there with them and then decide as to what are the technologies that need to be developed here within India. What are the technologies which we need to acquire from abroad? What are the industrial capabilities we need to Create here and then follow this strategic plan?
I have given the example of Israel, this is how they did it. Israeli firms went out, purchased manufacturing rights. Today you find in East Europe, Italy, all these countries, there are a lot of technologies, which are just available. A question of just moving out, getting them acquiring them and starting production here and then looking at integrating these technologies into the existing systems or systems, you see the number of programs that have been rolled out. This can be very easily used there. And it is, because of this well-crafted plan by the Israeli government that today we have these entities like IMI, IEI, Rafael and then are private companies like Soltem, Tadiran Electronic Industries
The list can go on. This is very important for the ministry. In the typical bureaucratic manner, you should not just say, okay, now we have created this and you are now on your own as you want and you find ways to survive. the industry, the ministry has to strategize and then only these DPSUs will flourish.
I sincerely hope that if this is done, then certainly the make in India program can be turbocharged. You will see a lot of good things happening in the defence manufacturing sector.
Finally, the capability is there because, despite all this criticism, you can not deny that today the ordnance factories have a very rich cache of knowledge on weapon systems and engineering. it may not be 100%, but certainly, they are a knowledge powerhouse. Better than anybody else in the country, whether it is a manufacturer of guns, manufacturer of rifles, ammunition, complex weapons. They all have massive real estate, they have the reasonably okay infrastructure. It may not be very modern. They have a workforce. Some of them are very bright people and very skilled people. But they have some fetal vulnerability which I have discussed and therefore if a golfer has a fetal golf swing, he can keep doing whatever he wants, but he will mostly miss the fairway and keep landing up in the hazards. It is time for them to perfect their things. If they do that, then there are 2 options available to them if they do it. They will follow the Israeli way. Otherwise, if they falter, then they will meet the fate of their cousin, royal ordnance factories, we know what happened to them.
Let’s hope that they can get their act together and finally we find some good conglomerates emerging out of this whole experiment. Possibly far superior to other global industries.
https://www.youtube.com/watch?v=Pl73x954PPI&t=1s
