The government has decided to convert 41 defence-equipment production units, working under the Ordnance Factory Board (OFB), into Public Sector Undertakings (PSUs) with 100 per cent government equity. But the employees fear that it is a first step towards privatisation.
A panel of Defence Ministry officials is in talks with the federations, trying to convince them to withdraw the strike.
Ajay Kumar, Secretary, Defence Production, had issued a statement last week saying that reports about privatisation of ordnance factories were mere rumours.
"The government is not proposing to privatise the Ordnance Factory Board and any apprehension in this regard is misplaced," Kumar had said.
The statement from the MoD has not allayed the employees' fears. Talks are expected to resume on Wednesday, but a representative of the OFB federations told that the workers will go on strike as planned.
The employees' federations that have threatened to strike include the All India Defence Employees Federation, the Indian National Defence Workers Federation, the Bhartiya Pratiraksha Mazdoor Sangh and the Confederation of Defence Recognised Associations. The strike call has been supported even by senior officials of the OFB.
According to OFB officials, the factories get 90 per cent of their orders from the Indian Army while the rest 10 per cent comes from various paramilitary forces under the Union Home Ministry.
"Purchases from OFB factories are made entirely by the government. Sales from the OFB are largely dependent on budgetary allotment to the Army and the portion of this allotment reserved for equipment purchase. We cannot resort to arms exports as they are possible only through inter-governmental agreements.
"Moreover, demand of equipment from the forces is very fluctuating and sometimes orders surface after long gaps. Order quantities are also not economical in nature. These factories cannot be pushed into making profits. If there are no profits, the Defence Public Sector Undertakings (DPSUs) will ultimately be privatised," said Mukesh Singh, General Secretary, Bhartiya Pratiraksha Mazdoor Sangh.
The employees' federations have argued that market principles cannot be applied to defence factories because the government decides what they produce, how much they produce, what resource to use, what price to charge and whom to sell.
For the past over 200 years, ordnance factories have been kept as department organisations considering the special nature of armed forces like volatility, non-uniform demand and requirement of uneconomical quantities.
The example of Hindustan Aeronautics Limited (HAL), a DPSU tottering under losses, has been cited by the federation as an example as to why corporatisation would not work for ordnance factories.
The government is yet to clarify as to how the restructuring of the OFB has been planned.
On Sunday, a delegation of employees' federations met Defence Minister Rajnath Singh with a memorandum of their demands. No assurance has come from the federations about halting the strike even as the panel of high-level officials is in discussions to avert the stir.
(The writer can be contacted at ayaskant.d@.in)
( With inputs from IANS )