Rejigging defence manufacturing units (English version) Rakshak News 03 Jul 19
http://www.rakshaknews.com/vishesh/new-direction-from-changes-in-defense-manufacturing-units
Rejigging defence manufacturing units (English version) Rakshak News 03 Jul 19
There was an announcement that Defence Public Sector Units (PSUs) are being shifted from the Ministry of Defence (MoD) to the Ministry of heavy industry. This step is being considered based on suggestions made by Niti Aayog and the National Security Advisory Board. In some manner, service HQs may have been behind the suggestion, as being their fixed customers, they were impacted by PSUs remaining under the MoD.
There are eight PSUs under the MoD. These are: Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), Bharat Earth Movers Limited (BEML), Mazagon Dock Limited (MDL), Garden Reach Shipbuilders and Engineers Limited (GRSE), Goa Shipyard Limited (GSL), Bharat Dynamics Limited (BDL) and Mishra Dhatu Nigam Limited (MIDHANI). These undertakings, besides meeting the requirements of the defence sector, also cater to some demands of the civil sector. Of the eight defence PSUs, five PSUs, namely, HAL, MDL, GRSE, BDL and MIDHANI are wholly owned by the Government of India.
Defence PSUs were created post Independence, when India had a poor technological base. With a growing IT sector and the emergence of the private sector into defence manufacturing these PSUs are losing importance. They were supported by the regularly reducing defence budget and most were non-profit industries. The profits they displayed were because they had a fixed customer, the armed forces, who had to procure their products. In many cases, including aircraft from HAL were costlier than procuring from the original manufacturer.
Within the MoD they operate under the Department of Defence Production. Complaints, including them being given undue preference and for being a stumbling block under the ‘Make in India’ program of the government have been on the rise. Further, the MoD could never take a decision of disinvesting loss-making PSUs. Over the years, being a part of the MoD, they have been given preference in orders, delays, payment schedules and quality.
This is possibly the start of reforms which the armed forces were waiting for. The next set of reform, which has already made a start is the reorganizing of the Ordnance Factory Board (OFB) with its collection of ordnance factories. These are also almost defunct industries, with poor quality of production and manufacturing items largely available in the local market. Further investment in them was not being contemplated as their work culture continued to deteriorate alongside its quality. In case they are to continue then they would need to be revamped with investments and converted into manufacturing items which meet specific needs of the forces.
In its latest move, which is a brainchild of the army chief, army HQs convinced the government that the present status of ordnance factories leaves much to be desired and the same should be taken over by the army. This has been agreed to by the government and a trial project has been launched.
A serving army officer has been appointed the Chief Executive Officer (CEO) of the AK 203 manufacturing ordnance factory at Amethi. The officer nominated is from the Infantry and would have a four-year stint as the CEO. He would be assisted by a few serving officers and for the interim period only by a few from the ordnance factory cadre. He has been granted requisite financial and decision-making powers.
A large part of the workforce would comprise veterans from the region. The success of this project in delivery schedules, quality control and reliability could change the atmosphere of control and functioning of ordnance factories for the future. This could then become a model for ordnance factories being taken over by the army, which could then be revived into producing defence specific requirements.
However, there would be stumbling blocks. There are multiple vested interests which would attempt to derail the project, not considering benefits to the nation, but from preventing the army from displaying its success. This would include those who would lose control of such factories in the long term, whether at the OFB or the MoD level. Further, such a success would indicate the efficacy of the army in engaging in managing its own specific needs and overcoming the inefficiency of the existing system.
The army should remain prepared to counter any attempts at stalling the success of this project. Like every other action it takes, the army must overcome odds to ensure success. This is a far-sighted approach, which apart from ensuring quality in meeting its own defence needs also meets the aspirations of the local veteran force, which would now find a secure second career.
The next step which the defence minister must consider is splitting the DRDO. It should have two components, developing units and manufacturing units. The two are presently merged. Ideally the developing units should remain under the MoD, while manufacturing units should be treated at par with PSUs. Will this also be on the cards?
About the Author
Maj Gen Harsha Kakkar
Retired Major General Indian Army
Sir please dont support such a move for the DRDO. The biggest bane of defence R&D is that it stumbles when seeking to transition from prototyping into manufacture. To have manufacturing orgs as part of the R&D set up is an inadvertent boon, which we should retain. Also adding/ combining DRDO to DPSUs is another effort we should resist. HAL et al, pursue import/org first policies. The DRDO retains independence and hence the relatively high level of indigenization in several of its flagship programs like Akash, which if handed over to the DPSUs would wither and be supplanted by imports. Instead, have them work with the private sector.
Noted your views. Thanks for them. Sounds very logical