Stop the Privatisation of Ordnance Factories: Stand with Ordnance Worker’s in their countrywide strike

The NTUI stands in solidarity with the 82,000 ordnance factory workers and several thousand officers who went on strike since 20 August 2019 to oppose the BJP government’s plan to corporatise the 41 ordnance factories located in Bihar, Chhattisgarh, Madhya Pradesh, Maharashtra, Odisha, Punjab, Tamil Nadu, Telangana, Uttar Pradesh, Uttarakhand and West Bengal.

The call for strike came from all ordnance factory workers’ unions at the end of July when it emerged that the Central Government had decided to transform the ordnance factories operating directly under the Ministry of Defense into 100% government owned Public Sector Undertakings (PSUs). These PSUs will now be registered as corporate entities under the Companies Act, 2013. No union has been consulted in this process nor has any concrete plan yet been revealed regarding the manner in which this corporatisation will be carried out. This corporatisation impacts the Ordnance Factory Board, 41 ordnance factories, 9 training institutes, 3 regional marketing centres and 4 regional controllerates of safety that are at the centre of our country’s defence production. The ordinance workers unions are correct in their understanding that corporatisation is merely a cover to subsequently privatise the ordnance factories and other related establishments.

That corporatisation will eventually lead to privatisation is evidenced by numerous actions of the BJP government since 2014. Mr. Narendra Modi in his first Red Fort address as Prime Minister on 15 August 2014, asked for private and foreign firms to invest in India to make everything from satellites to submarines. The Consolidated FDI Policy Circular introduced in 2016 removed many restrictions on foreign investment in defense manufacturing. The enforcement of the Arms Rules 2016 facilitated production of weapons by domestic private firms in collaboration with foreign partners. 275 defense products previously manufactured by the Ordnance Factories have been outsourced to private firms. Hindustan Aeronautics Limited was sidelined in favour of Dassault and Reliance ADAG in the Rafale Deal. The number of defense manufacturing licenses given to private firms have witnessed an over 100% increase between 2014 to 2019 and private defense production has grown from a marginal position prior to 2014 to nearly a fifth of all defense production in 2018-19. Committed to aggressively promoting private and foreign participation in defense manufacturing, the BJP government clearly intends to place defense manufacturing under the control of the profit motive and encourage private interests to dictate defense expenditure.

Promotion of private participation in defense manufacturing is no guarantee of larger output, timelier deliveries, better efficiency or greater self-sufficiency. India’s arms imports have risen by 24% between 2013 and 2017, despite the host of measures to encourage private defense manufacturing. The Standing Committee on Defence, 2017-18 also highlighted the rising import content across defense products manufactured domestically with the ordnance factories alone being an outlier having reduced their import dependence by over 22% between 2013-14 and 2016-17. Private sector performance has also been severely criticised by the Comptroller and Auditor General of India in its Report No. 36 of 2016 on account of failures to deliver supplies and spares; both later sourced from the ordnance factories. Hence, it is clear that the BJP government’s decision is rooted in an ideological commitment to the private sector that is disconnected from facts.

Even were the government’s claims to be taken at face value, that corporatisation will not lead to any subsequent dilution in government’s ownership, converting the ordnance factories in to PSUs will only place them in the tender mercies of the BJP government which since 2014 has bled dry the public sector through large dividend payouts, buybacks, asset sales and even at times forcing some PSUs to fund divestment of others. Also, the strategic dismantling of PSUs like Air India and BSNL at the cost of their workers to benefit private competitors including Jet Airways, Spice Jet, Indigo, Airtel, Jio and Vodafone, presents a bleak picture for any PSU under the control of the BJP government.

Ordnance Factories make a range of products from ammunition, explosives, weapons, vehicles, armored vehicles, military equipment, materials and components supplying exclusively to the army and paramilitary forces. Private firms are unsuited for the work performed by the ordnance factories as the army’s demand for products is inherently of a fluctuating nature suffering from multiple revisions, changes in requirements and adaptations. Take the case of the V-46 engine manufactured for the T-72 battle tank. In 2007, the Army wanted 111 engines, in 2008 it wanted 170, in 2009 it wanted 317 and in 2010, 71. No orders were placed in 2011 and 2012. In 2013, the Army wanted 418 and in 2016, it ordered 257. How can a stand-alone private entity mold its operational capacity to suit demand which grows over 86% in one year and crashes by near 78% in the next, especially when norms demand that ordnance factories maintain idle capacity sufficient to cover a demand surge of 300%? It is for this reason that defense manufacture was maintained within the public sector. It also restricts the extent of profit led militarisation and armaments build-up.

The NTUI salutes the courage of the 82,000 ordnance factory workers and several thousand officers in striking.  Despite facing threats of the Essential Services Maintenance Act from a government that has shown on multiple instances that it is intolerant towards democratic right to dissent, the workers and officers held firm on their strike call. This strike transcends the issue of wages, job security and service conditions and even the issue of privatisation of the public sector. It is a strike aimed at the new neoliberal ideological offensive launched in the 2014 by the BJP government which cares for no interest other than corporate interests.

Gautam Mody
General Secretary