The Indian Ordnance factories are country’s oldest and largest single organisation in the defence industrial setup. It comes under the control of the Department of Defence Production of the Ministry of Defence. The first factory was set up in the year 1802 as a result of the British political and economic interest in India. Headquartered at Kolkata, it is a conglomerate of 41 factories, 9 training institutes, 3 Regional Marketing centres and 4 regional controllers of safety. These factories are distributed over 24 different locations all over the country majorly in Maharashtra, Uttar Pradesh and Madhya Pradesh.
The present scenario:
In May 2019, the Tribune reported, “The Army has sought immediate intervention of the Defence Ministry to check rising cases of accidents involving battle tanks, artillery and air defence guns due to ‘poor quality’ of ammunition being supplied by the OFB.”
The Ordnance factories are often considered the “fourth arm of Defence” but they are disliked by the other three arms i.e, the Army, Navy and the Air force. They have always been questioned on the terms of inefficiency, untimely delivery of equipment, the volume of exports. The Armed forces are very often forced to use such low-skilled arms made by the factories because they have no other buyers for various reasons as above. Certain trends show that there has been an overall increase in the net production by 24 per cent but the manpower has drastically decreased by (-)16.77 per cent.
There were certain measures taken to keep a check on their sloppy behaviour and the Nair committee in 2000 floated the idea of the corporatisation of the Ordnance factories but the leftist ecosystem made sure that these steps were never taken into action during the Vajpayee government and later, the UPA government turned a blind eye towards all of this and there was no question of the Manmohan Singh government to implement the reforms. The government now, just for the sake of running the factories buys rotten equipment worth 14000 crores and in addition to that, the Ordnance factories are compensated with around 700 crores rupees just to subsidize their losses from the overall operation. Countries like Sri Lanka, Maldives, Myanmar who are Defence allies of our country buy their defence equipment from China because Indian companies are not able to fulfil their demands and who would spend so much money to buy equipment that is not cost-effective. “Work-in-progress (unfinished items lying on the shop floor) constituted 32 per cent of the inventory. Orders as old as the year 2009-10 were yet to be delivered, a delay of 10 years. Apple graduated from iPhone 4 to iPhone 11 within this period and here we are still in a primitive state of functioning.” wrote Rajan Kochhar, retired Major General, in Economic Times, on Ordnance Factories.
The Global Defence Industry and India:
India’s positon in the Defence industry as compared to the world is very modest. Countries like the United States hold about 77 per cent of the top 10 multinational companies that produce world class Defence equipment followed by UK, France and Germany. They are also increasing outsourcing through collaborations and joint ventures with many smaller companies and also direct outsourcing of various parts and components. Due to this, countries like Israel have able to set up their Defence industries like ELTA, Mabat etc. in partnership with these giant companies. Smaller countries like Singapore was reported to have sold Defence equipment worth 125 million dollars way back in 1987.
The Indian ordnance factories, let alone exporting, are finding it hard to meet the demands of our armed forces. India has now become the largest importer of Defence goods amongst the developing countries spending around 44000 crores during the year 2003-2006, overtaking China. Thanks to the efforts of the Defence Research and Development Organisation (DRDO) of the Ministry of Defence which can provide the necessary and significant edge to the countries Defence in recent years. India’s position on the global map can also be estimated by the share of export as compared to China. Where China was able to sell defence equipment worth 17,900 crores (about 8 per cent of worlds arms export), India’s export was about 18.79 crores, negligible.
What can be done:
The Defence Industry as a whole is not a very marketable area. It caters only to the needs of the government and even in the case of export of goods, it’s majorly controlled by the government. It’s and Industry which is technology-intensive and requires two major things to flourish constant research and development and large scale production. Often one of the two requirements stated above is not fulfilled. If there is proper research being done for certain parts or equipment, the scale of production is hard to meet.
The major questions that arise are, what can be done to make the Ordnance factories of the country more efficient or what can be the parameters to determine its competitiveness?
1. 78 per cent of the total goods produced by the Ordnance Factories goes to the armed forces when their requirement is a mere 38 per cent. This should be checked and instead of supplying an extra 40 per cent of goods that are less effective and poorly built, the factories should focus on providing 38 per cent best quality material.
2. 80 per cent of the prime customers of the Ordnance factories are the armed forces of the country and its very important that the armaments reach them at the desired time. Data shows that there has been a 24 per cent shortfall in the outstanding demands of the items for production against the target fixed by the management. According to C&AG, there has been a 32 per cent shortfall of supply of 18 clothing items to the forces in between the year 2000-2004. It can be seen that they have been unable to fulfil the requirements of their prime customers.
3. Cost-effectiveness is another factor. Defence items are costly and a lot of times the customers perceive the items to be far more expensive than they should be. Sometimes the products are underpriced, 450 items were sold at a cost lower than their actual price by reducing the issue price from actual cost ranging from (-)0.018 per cent to (-)89 per cent of its actual cost of production. This resulted in an additional cost burden of 300 lakh rupees in the year 2004-05.
4. An amount of 17.50 crores is allocated to the Ordnance factories for R&D. Of which only 10 crores were spent on research and developments of goods in the year 2005-06 and this amount remained capped in the subsequent years as well. It’s strange that an industry that depends majorly on R&D spends the exact amount of money every year and that too less than the amount allocated for the same.
5. The Government has fixed 80 per cent capacity utilization for the Ordnance factories and only 75 per cent was utilized in the year 2000-2005. They achieved the said target of 80 per cent in the year 2000 but since then there has been a constant decline of 5 per cent every year. This clearly shows the lack of utilization of the manpower available to them
The OFB is now under siege as the forces are now demanding better armaments and top-quality ammunition and that too at a reasonable cost. They have their hands on quality equipment like the 155mm Bofors, FH77 Howitzers, SAM Missiles, T 90 tanks, Polish and Slovak ARVs, latest Russian SAM systems like Tunguska and OSA M, Israeli UAVs, Russian GRAD Multi-barreled rocket launchers and now its a challenge for the OFB to be operational with increasing competition.
The Army has now realised that its efficacy is no longer dependent only on its manpower which is world-class by the way; the 28 Rashtriya Rifle battalions keep aksing for more manpower in Kashmir. The Army showed its unhappiness when a large number of arms and ammunition were imported from Russia, South Africa and Israel. The situation could have been scary if the war had escalated.
A mine incident killed 30 Jawans in mobilisation and Hiran Pathak who was responsible for the supplies and production gave a wake-up call to the OFB and said if they want to survive they need to invest both time and money in R&D and also warned them of privatisation. Several giants like Tata’s, Larson and turbo, Mahindra and Ashok Leyland are ready to invest in the production of Defence equipment.
The working of the Ordnance factories all round the country should be checked. Its the question of our countries security and having such irresponsible behaviour should not be tolerated. The inefficiency of the Ordnance factories affects the armed forces and especially in situations of war that we have faced a lot of times, such carelessness can have a very catastrophic effect.
Reference/s:
•https://idsa.in/system/files/jds_3_3_nneihsial.pdf
•https://web.archive.org/web/20150924034309/http://www.indiadefence.com/OFB.htm
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3 replies on “Indian Ordnance Factory”
I didn’t know about the ordnance factory up until now…
A must read, very “sanely” written
Great Job . This shows your hardwork. Best of luck to all. Happy diwali to all sanely written family and special Happy diwali to Divyansh bhaiya.
The OFB are a Black Hole of corruption and incompetence,which has led to losses of Billions of USD, to date,to the Nation.The Baboos and others who run the OFB ,have blown holes, in every aspect of the operations of the OFB – from purchases,manufacturing.wastages,yields,losses of stocks,defectives,sales returns, costing frauds,labour contract frauds ……
Pakistan exports JF-17s and the OFB can’t even export a screw driver.
An Ordinance Factory cannot be run, on the basis of a “FOR PROFIT” motive.It is like the Nuclear Fuel Complex – which is NOT A CORPORATION.UCIL is a Company – but not the Nuclear Fuel Complex.
The PURPOSE of the Corporatisation, is to WHITEWASH ALL THE FRAUDS AND LOSSES in the OFB ,and all its UNITS in India – and THEN, run it as a COMPANY – To provide the excuse to RETRENCH STAFF,and convert the labour, into piece rate workers (as most OFBs run at 50% capacity – and on many orders – then pay OT – as there are induced staff shortages).THEREFORE,THE STAFF COSTS ARE CUT, TO OFFSET THE LOSSES AND FRAUDS IN MANUFACTURING OPERATIONS.
IT MUST BE NOTED THAT LOSSES AND FRAUDS IN OPERATIONS = DIVERSION OF ORDINANCE AND WEAPONS,TO “ALTERNATIVE USES”.
To save the Political and Baboodom, FROM THE cost of sacking the staff – the best option, is to get a Board of Directors to axe the staff – and then use that legal cover, to raise capital, from the equity markets.
Y Does the GOI have no capital ? Because all the banks are looted and busted – like the latest record making Rs 8000 crores bank fraud, on Canara Bank and 13 more banks,where Canara Bank was the lead bank.The borrower was Transstroy India Limited – owned by a TDP MLA.
Netas have used Banks to loot the Indian People – as the persons who go to jail are the Baboos,Bankers and Borrowers – while the Borrower has paid off the Neta.
The Netas will NOT recoup the Bank Frauds and Wilful defaulters – as that money,is with the NETAS – and thus,have to raise oil prices and sell PSUs – through ingenious tools – UNDER THE COVER OF COVID.
THE ENTIRE INDIAN BANKING SYTEM,IS DESIGNED,AS A TOOL FOR THE NETAS,TO LOOT THE INDIAN PEOPLE – LIKE A TAX ,OF SAY , 5% OF THE INCREMENTAL BANK DEPOSITS, IN A YEAR – BY STEALING THE LOANS MADE TO THE CRONIES,OF THE NETAS !
Y DO BANKS LEND TO THE PROPERTY SECTOR, AND NOT DECLARE OR DISCLOSE FRAUDS ? IT IS TO KEEP THE PROPERTY SECTOR BLOATED AND AFLOAT. UNLESS THERE ARE 3-5 LACS CRORES OF PROPERTY LOANS EVERY YEAR – THE RESALE MARKET WILL BE DEAD – AND PRICES WILL CRASH – AND IF NEW PROJECTS ARE NOT FUNDED, THEN STEEL, CEMENT AND FURNISHING SALES WILL CRASH. SOME PEOPLE SAY THAT BY FUNDING NEW PROJECTS – BANKS ARE INCREASING SUPPLY AND LOWERING PRICES ! NONSENSE! BANKS LEND TO THESE PROJECTS – KNOWING THAT THE PROJECTS WILL BE STALLED – “BUT THE LAND WILL BE BLOCKED ,AND WILL NOT ENTER THE SUPPLY SIDE OF THE EQUATION”
THAT WILL CREATE A LAND SQUEEZE,AND A “PUT OPTION” ON THE PROPERTY PRICES.ALL THIS BENEFITS THE NETAS ALSO – AS THEY OWN BILLIONS OF USD OF BENAMI AND LEGAL LAND – AND THE LAND BOUGHT BY THE DEVELOPERS IS THAT OF THE NETA (AT INFLATED PRIICES – AND SO,THE NETA COERCES THE BANKS TO GIVE THE LOANS)
BUT THE BANKS ARE THE BIGGEST SCAMSTERS,AS THEIR ENTIRE CREDIT PORTFOLIO FOR ALL SECTORS – HINGES ON THE COLLATERAL OF LAND AND PROPERTY PRICES – AND IF THAT CRASHES – EVERY THING WILL CRASH !
THAT IS Y BANKS DISCLOSE BANK FRAUDS IN THE PROPERTY SECTOR 5-8 YEARS – AFTER THE FRAUD HAS OCCURRED – WITH THE RBI BLESSINGS – SO THAT THE DEVELOPERS AND NETAS HAVE ENOUGH TIME TO STEAL AND VAMOOZE AND THE PUBLIC (WHO BOOK THE FLATS ARE CONNED)
LOOK AT THE TIL FRAUD ON CANARA BANK ! THE ACCOUNT WAS A SUBSTANDARD ACCOUNT IN 2014 AND WAS DECLARED A FRAUD IN 2020 – AFTER A FIR WAS FILED BY UNION BANK ! CANARA BANK DID NOT DECLARE IT A FRAUD OR FILE THE FIR (ALTHOUGH THEY WERE THE LEAD BANKER).
Y ?
THEY WERE THE PLANNERS OF THE SCAM AND THE BORROWER WAS A TDP MP – WHO OWNED CAN BANK. ELSE,THE BORROWER COULD HAVE CHOSEN SBI AS THE LEAD – BUT IT DID NOT – AS THE AIM WAS TO RIP OFF THE BANK ! TO ENSURE THAT THE TDP MP WAS NOT TAINTED FOR 7 YEARS AND THE CHARGESHEET WAS NOT STATED, IN THE ELECTION COMMISSION AFFIDAVITS – CAMARA BANK DID NOT FILE A FIR OR DECLARE THE BANK FRAUD ! dindooohindoo