Zero-hour submission in Rajya Sabha on 19th July 2017 on privatization/outsourcing in state-owned defence production sector
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Dear Shri Subhash Bhamre Ji,
Thank you for your letter no Q0006/2/2017-D (Prod-III)/996-F/2017/RRM dated 24th August 2017, in response to my Zero-hour submission in Rajya Sabha on 19th July 2017 on privatization/outsourcing in state-owned defence production sector, I have received your letter on 31st August 2017.
In the context of your response, I like to impress upon you the following:
You have stated that outsourcing of production of 143 items so long being produced by the Ordnance Factories are all non-core items which can easily be produced from private sectors directly by the user in the sustainable basis. This optimism does not match with reality. On previous occasions also, around 23 items of such products had been outsourced in favour of private sector and finally all such orders placed with private vendors as per sanction by Commandant CAFVD had to be cancelled during September 2011 to February 2012 following which indents for supply of all the 23 items were placed on ordinance factories in March 2012. The CAG Report no 36 of 2016 has confirmed this fact. This time the outsourcing is being made on a much bigger scale on the same plea of those termed as non-core items. Such experiment does not warrant in respect of retaining our productive capacity on defence sector requirements, based on previous proven experience, which may please be appreciated.
Secondly, how should those 143 items under outsourcing be categorised as non-core items? Each and every item among those 143 items including the comfort items is of indispensable necessity for our armed forces guarding our fronts in hazardous atmospheric conditions. How can production of ammunition-boxes or grenade-cases be separated and planned for production by private agencies? Can the synergy between manufacture of ammunition or grenades in Ordnance Factories and their boxed or cases being manufactured by private vendors be maintained effectively? There are many other issues pertaining to efficiency, integrity and quality-assurance involved with this process of large scale outsourcing and the entire matter warrants a review and reconsideration.
Thirdly, you have kindly stated that such outsourcing does not entail retrenchment of the employees of Ordnance Factories. But, will not such large scale outsourcing accompanied by issuance of 200 plus licenses to private vendors, finally end at redundancy in Ordnance Factories so long producing those 143 items impacting detrimentally the job-contents/skill, hence service-condition of the employees?
Fourthly, in my zero-hour submission, I have also raised the issue of contracts between the private corporate and foreign manufacturer companies in aviation and naval sector with assured order book from the defence ministry armed forces, where the concerned defence PSUs have been debarred to participate. Are there initiatives not going to have destructive impact on the manufacturing capability and installed capacity of our defence PSUs ? Initiative of greater self-reliance is always welcome but is it wise to allow redundancy followed by destruction of already attained indigenous capacity and capability in state-owned establishments in lieu of expected abd yet-to-come creation of additional manufacturing capacity through the private- foreign company joint venture route?
Fifthly, I have also raised the question of unjust Govt decision of strategic sale of BEML, a Maharatna PSU. On those above two issues, your letter remained silent.
I urge upon total reconsideration of the policy approach of the Govt on defence procurement in national interests.
Shri Subhash Bhamre
Minister of State for Defence
Govt of India