Private Sector

In defence production, give private sector a chance

By ET News

The government’s recent decision to ‘corporatise’ the 250-year-old Ordnance Factories Board (OFB) and re-group its 41 units into seven product-oriented defence public sector undertakings (DPSU), has come not a day too soon.

While this may be a step in the right direction, its success would be measured by the enhancement in efficiency, productivity and work-ethic this new paradigm can infuse in workers and management of the newly-minted entities. It may be apt to focus on the ‘public versus private’ debate in defence production.

It is a sad irony that focus on the public sector has led us to overlook the crucial role played by pioneering private entrepreneurs, epitomised by individuals such as Seth Walchand Hirachand and two Danish engineers, Holck-Larsen and Kristian Toubro, in laying a sound industrial foundation for India. While the former established Walchandnagar Industries in 1908, Hindustan Aircraft in 1939 and the Scindia Shipyard in 1941, the Danish duo set up L&T in 1938.

Despite nationalisation and other headwinds, private entrepreneurs such as these have made crucial, early contributions to India’s DIB.

India’s post-independence quest for self-reliance has seen many successes, but when it comes to the DPSUs and the OFB, their record is lacklustre. Exclusion of private enterprise from defence-production, may have served to protect the DPSUs from competition, but it has also served to curb ingenuity, innovation and initiative in our DIB.

Within the defence sector, military-aviation is seen as a ‘low-hanging fruit,’ mainly because the government-owned Hindustan Aeronautics Limited (HAL), is, now a monopoly supplier to the military.

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