Making Indian Armed Forces Financially Self Reliant.

 By Brig. Pradeep Sharma (Retd).


On the heels of my earlier article published by IDR, some very important initiatives have been announced and steps taken by the Government. While these in my considered opinion have come only about four decades late and the roll-out of results are likely to be felt not before another five years, to say the least, it is indeed a much desired beginning in the right direction.

Professionalising the Ordnance Factories

 Ordnance Factory Korwa gets it’s first Army officer as a CEO, reports The Print. The Korwa Ordnance Factory in Uttar Pradesh’s Amethi district will manufacture AK-203 assault rifles for the military under an Indo-Russia joint venture. The factory which comes under the Ordnance Factory Board will see a serving Major General as the CEO for the next four years, his team is expected to have other serving officers as well.

With the dissolution of various Army Base Workshops, a large number of experienced officers, JCOs and Men are likely to be relieved, the best amongst them could be immediately made available not only to the factory at Korwa but also to other such Ordnance factories which require better results in terms of quality, timely delivery and accountability.

This was the premise for having serving officers on deputation in DRDO but it did not yield desired results. Corporatisation may be a change catalyst where monetary gains and competitiveness could bring in more efficient and productive working.  Officers from the ‘support cadre as well as retired defence officers if meeting the QR’s can be hired. Corporates being target driven would automatically lead to weeding out non-productive individuals, thus creating a team which delivers with the right motivation, style of management and targets.

The Perspective Planning Directorate, as well as all Line Directorates, should be kept in the loop since they would all be interested parties and stakeholders in the projection of demand as end-users.

The stakeholding of OFB in the venture of 50.5 percent, Kalashnikov owns 42 percent and Rosoboronexport 7.5 percent could be a benchmark for the future, almost on the lines of Defense Conseil International  (DCI) of France where the Government holds 49% share in this case, we would be the major shareholders. New rifles are expected to replace the 5.56 INSAS and the three services are expected to spend approximately 12,000 crores. The financial benefits, which India could expect, need to be worked out keeping in mind indigenous production & the sale of AK-47s, as well as, 5.56 to other countries/organisations.

A similar review is required for the remaining 40 such factories, the product, its need and the concerned arm or service should be identified, based on this, select officers from the Armed Forces need to be inducted into these from the bottom upwards to gainfully utilise available expertise, make them more responsive and accountable to the services and also reduce the costs of production.

The Ministry of Defence (MoD) would do well to take this matter up, with the close cooperation of Army Headquarters (MS Branch & Line Directorates) as well as DGR( where required) and OFB in this process without further loss of time.

OFBs should prepare and plan to induct manpower from the support cadre across all arms and services to induct fresh blood and energise the rather stagnated efforts of these factories. Other issues such as technical teams, qualifications, target countries for sales, target manufacturers for tie-ups, trials, setting up of ancillary units for production of spares, servicing, up-gradation need to be factored in for operational imperatives of every sector.

Corporatising the OFB. Further, as a follow-up, the long talked about Corporatisation of the OFB must be carried out without loss of time, TKA Nair Committee (2000), Dr Vijay Kelkar Committee (2004), Raman Puri Committee (2015), and Shekatkar Committee (2016) have recommended the corporatisation of the OFB. The OFB and OFs have often been commented upon for high costs and poor quality amongst other issues, corporatisation may be seen as the answer to address these areas and make them a money driven entity.

The OFB too needs to have a substantial number of Officers with requisite technical or operational qualifications to allow close cooperation and integration between the Production Units and end-users. A most important change required is to break the stranglehold of Unionism by bringing them under the Army Act, also hold them accountable under the Official Secrets Act. MS branch may not spare officers aligned to the culture of working with trade unions and drive to bring a turnaround. However, a  relook at employment opportunities for the support cadre officers to revamp of the setup is required and privatisation of the DPSU can be the change to break all the shackles of the bureaucratic stranglehold

Ministry of Defence(MoD) & DoP. Both of these establishments, which are overstaffed and carry a load of deadwood need to be downsized and where feasible, replaced by motivated leadership from each of the Defence Services to create synergy, delivery goals, and better integration. This being a dire necessity to break the stale atmosphere and the ‘ conflict’ between bureaucrats and defence forces which has been weighing down National Defence Preparedness.

The Armed Forces need to be given a degree of freedom to create the necessary transition from being ‘dependent on budget allocation’ to becoming ‘self-reliant financially’ to a greater extent.

It is a must for the Government to understand and exploit the motivation and drive within the  Armed Forces to transform from a force which only ‘protects National Interest to a force which is seen as a Nation Builder’ somewhat on the lines of the Israeli Defence Forces(IDF). To this extent, the Study Group ordered to evaluate the appointments in MoD needs to deliver free of any pressure or politics.

Immediate Impact on Defence Preparedness.

Any such transition or change is bound to have an impact on our defence preparedness. There are bound to be hiccups, conflicting power struggles, some to retain and others to gain control! However, National Interest must be given priority over everything else.

Given the border standoff between India and China as well as the possible two-front war with Pakistan and China, it would be ill-advised to jump-start this change without catering for our immediate defence needs. A measured approach would therefore best suit the Nation’s interests, therefore, MOUs for providing weapons, equipment, technology, ammunition as well as other war waging wherewithal need to be carved out with care to cater for our needs over the next five years by which time indigenous production and maintenance kicks in. Should this call for additional funds, we need to cater for them.

As one can imagine, this would be a huge task involving a complete ‘overhaul’ of our defence set up.

During this ‘period of experiment,’ the establishment of a network for command and control of remotely operated PGMs, Long Range UAVs, and other means of Surveillance over our areas of Interest and Areas of Influence under the aegis of the Armed Forces must be completed and operationalised to ensure there is no surprise as that suffered during Kargil and Ladakh.


Considering that India’s current leadership is committed to big-time changes with a focus on national security. It is the most appropriate time to take the overdue step of corporatisation of the OFB and removal of bureaucratic control, to address the key challenges of ordnance factories for making our country more self-reliant in defence production. Lessons from the world over in past battles amply highlight the pitfalls of  Nations dependent on foreign countries for Defence equipment, armament, and other such war waging material.

This is a major step towards becoming self-reliant in defence. Once this ambition is realised, we could expect a financial turnaround from being the worlds second-largest importer to an exporter, it is here that the Government would do well to give the Armed Forces a mandate to lead this change towards self-reliance.  The Government has announced an EGoM to go into details and work out mechanisms. The three Services would do well to set up a study and advisory mechanism to work closely with the EGoM. Considering the serious nature of reforms and the complexity, a detailed study is warranted to lay down the road map and implementation be closely monitored by PMO.

References for reading:-

1.Indian Army: A Nation Builder Through Character, Leadership & Industry. Indian Defence Review of 29 July 2020.

  1. Indian Army Contracts with Private Military Companies: The Way Forward. Indian Defence Review of 04 September 2020