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Skilling Gaps in Defence Sector for ‘Make in India’
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Issue Vol. 32.2 Apr-Jun 2017 | Date : 07 Sep , 2017

India has the potential to emerge as a global platform for defence research, manufacturing and supply chain sourcing. With ambitious acquisition plans for modernisation, India has a historic opportunity, as the Modi Government has launched the ‘Make in India’ initiative. The Defence Sector is one of the 25 sectors which can propel manufacturing to new heights. Many proactive steps such as change in DPP, Licensing norms, FDI limit have been taken. However, this sector to take off needs adequate and quality talent. India needs about 200,000 skilled people in the defence and aerospace industry in ten years. For the Aerospace and Defence industry, which works at the cutting edge of technology, availability of technical talent is becoming an acute challenge. There are serious structural gaps in the Demand and Supply of talent in this sector.

One of the critical challenges facing the Aerospace and Defence (A&D) industry today is the need to attract and retain top engineering talent that supports current goals and fuels future competitiveness (PwC, 2015). Forward-thinking A&D companies recognise that a highly engaged, talented workforce can help them to gain an edge in the marketplace. The quality of talent is critical to the organisation’s success (EY, 2016). It needs deeper introspection on the extent of Qualitative and Quantitative aspects of the Talent Crisis in India’s Defence Sector, as we stand on the cusp of a historical opportunity from being the largest importer of defence equipment to a self-reliant India.

India has the third largest armed forces in the world. The allocation of Defence in India’s Union Budget is approximately $34.53 billion and 31.1 per cent of the defence budget is spent on capital acquisitions. 60 per cent of defence related requirements are met by imports which offer a huge opportunity for import substitution (GOI, 2016). In his address at the inauguration of Aero India 2015 in Bengaluru Prime Minister Narendra Modi said, “We have the reputation of the largest importer of defence equipment. We too need to increase our defence preparedness. We need to modernise our defence forces”. He went on to say that a strong Indian defence industry will make India more secure. It will have room for the public sector, private sector and foreign firms. India will need about 200,000 skilled people in the defence and aerospace industry in the next ten years (Sanjai & Shukla, 2015). The defence sector is one of the 25 sectors identified under the ‘Make in India’ flagship programme of the Modi Government. Success of ‘Make in India’ demands success of the defence sector by removing constraints in the areas of production, most important of which is the talent factor.

Besides the defence sector, India is upbeat about the aerospace sector as well…

Besides the defence sector, India is upbeat about the aerospace sector as well. India is set to import aerospace products worth $100 billion in the next ten years, which in turn would provide a $30-billion offset opportunity for the domestic industry. The Indian aerospace sector will need at least a million fresh and skilled workers over the next ten years, according to Rajiv Pratap Rudy, Minister for Skill Development and Entrepreneurship (MSDE). In the aerospace sector, manufacturing, Maintenance, Repair and Overhaul, operations and Research and Development are the areas in which India needs fresh talent. In the case of aerospace, 80 per cent of the fresh and skilled talent is required for operations (Sanjai, 2015). Can India meet the skill demand of this sector?

According to a survey conducted by Manpower Group in 2013, 61 per cent of the employers have indicated that the non-availability of the required skills has affected their hiring plans and in turn, has forced them to train for several months to make them employable. Further, the survey also mentioned that engineers are the second most and technicians the fourth most difficult employees to be hired worldwide. The non-availability of industrial and engineering talent is likely to pose a serious challenge to manufacturing in aerospace and defence sectors (Kumar & Kapoor, 2015).

The defence manufacturing industry is undergoing a rapid evolution spurred by technology advances, globalisation and shifting demographics. An ageing and retiring workforce in the public sector, combined with technological advances and outmoded talent management processes are taking their toll. The shortage of qualified workers has been a serious issue for years. This begs the question, what must be done differently in order to ensure the success of the ‘Make in India’ programme in the defence sector? Just a statement that there are gaps is insufficient and incomplete. This paper precisely tries to address this gap in the body of knowledge, by analysing discipline-wise, zone-wise and level-wise way talent gaps. This paper measures structural gaps by looking at the demand pattern of technical manpower requirement vis-a-vis supply and quality of manpower from the labour market.

Industrial Training Institutes (ITIs) play a vital role in the economy of the country, especially in terms of providing skilled manpower…

Nature of A&D Industry and Talent Requirement

India’s defence industry, which has seen a steady growth in recent years, seems poised for even better days. The A&D sector in India is now being looked at as a sunrise sector and it has the potential to generate a large number of engineering jobs in the years to come. The good news is that the government has a clear vision for an indigenous defence industry, backed with speedy clearance of acquisition proposals. The defence companies across the globe are increasingly looking at India as a lucrative sourcing hub in order to remain globally competitive. At the same time, India has a tremendous potential for exporting engineering services and component manufacturing capacity in these sectors. Thus, opportunities are immense.

As the industry has been redesigning and streamlining production lines, with higher levels of process automation, the nature of the work required is changing. The jobs most difficult to fill are those with the greatest impact on performance. Employers demand more skilled workers than any time in the past. In the wake of a talent crunch, all employers will continue to require more from their employees. The talent crisis will be accentuated, as an increasing number of workers age or retire. Shortages in skilled production jobs can take a toll on manufacturers’ ability to expand operations, drive innovations and improve productivity.

The defence industry needs engineers specifically with a background in mecha-tronics (mechanical and electronic engineering), composites (combination and strength of materials) and system integration knowledge. However, supply of the talent pipeline is constricted as few Indian universities offer courses tailor-made for the defence and aerospace sector (Mithel, 2012). Rahul Gangal, Partner, Aerospace and Defence at Roland Berger Strategy Consultants said “One of the big challenges for the realisation of the ‘Make in India’ vision for the sector is the availability, at efficient price points, of globally comparable industrial and engineering talent with experience in the sector” (Sanjai, 2015).

Jailendra Kumar, Ex-Director of Technology, BAE Systems India and former Scientist, DRDO, stated that that the biggest challenge before him in those years was to build teams with the right man for the right job. “These are not simple technology projects and there is no one qualifying degree to be eligible”. Human Resource firms provided him long lists of possible candidates but he would often find few matches (Mithel, 2012). KunalGirap, Director, WalkWater, a talent advisory services firm commented, “Sourcing talent for the sector is going to become a bigger challenge now because a lot of defence related programmes are drawing to a close.” (Mithel, 2012) Thus, sourcing quality talent is an impediment to the growth of this sector.

Analysis of the Structural Gaps

Although the defence sector comprises many sub-sectors, future requirement of manpower is not available in all the sectors. Table 1 brings out our skill gaps in the sub-sectors of Electronics, IT and ITES, Auto and Auto Components.

Table- 1: Projections of Skill Gaps By MSDE Relevant to the A& D Sector 

Difficulty in getting manpower would be least in Auto and Auto Components sector, whereas difficulty in getting manpower will be most in Electronic and IT Hardware sector. As Electronics, IT and ITES are critical to any weapons platform in C4ISR warfare, unless the problem in skill is addressed, this sector will have roller coaster rides in managing growth.

Regional Gaps

Table 2 below brings out state-wise distribution of DPSUs and OFB indicating the region.

Table 2: Regional Distribution of Major Government Manufacturing Units Across India

The largest concentration of defence industries is in the West and South followed by North and East regions. For balanced development, the labour market supply should be ideally distributed proportionally in the regions. Against this need, let us look at the distribution of manpower supply for these regions (see in the Table 3).

Table- 3: Distribution Of ITI Seats Across Regions

Gaps in Industrial Workmen

Table 3 indicates seat availability in each region, as a percentage of all India.

Thus, there is likely to be shortage in the Western Region at the macro level.

Industrial Manpower

Industrial Training Institutes (ITIs) play a vital role in the economy of the country, especially in terms of providing skilled manpower. ITIs are functioning under the administrative control of the respective State Governments/UTs/private organisations. Since September 2012, inspection and accreditation of ITIs is being done through the Quality Council of India. 

According to a report by ‘Aspiring Minds’, an education assessment company, the employability of engineering graduates in various states ranges between 12 and 42 per cent…

At present, there are a total of 11,964 (Government 2,284 + Private 9680) ITIs  in all States/UTs. Training is imparted in 126 trades (73 Engineering + 48 non-Engineering + 05 exclusively for visually impaired) of duration one to two years. After completion of training, trainees are required to appear in the All India Trade Test conducted under the aegis of National Council for Vocational Training. A National Trade Certificate, nationally and internationally recognised under the aegis of the National Council for Vocational Training (NCVT), is awarded to successful trainees. (http://dget.nic.in/content/institute/key-statistics.php). This Trade Certificate is recognised by the Government of India for the purpose of recruitment to subordinate posts and services under the Central Government.

Although there are 126 trades, the following analysis is limited to the trades, which are relevant to the A&D Sector. Table 4 brings out the trade-wise availability of seats which may come in the way of the growth of the A&D sector, if not addressed urgently. 

Table 4: Trades Where Seat Availability Count Is Limited

It can be seen that most of the trades which have limited seats, are critical to high-end A&D sector. Although there are shortages, as brought out in Table 4, interestingly, there are also surpluses in terms of utilisation of seats too as brought out in Table 5. 

Table 5: Trades Where Seat Utilisation Is Low

There are reasons for assurance, as there are sufficient seats available in many of the trades, as brought out in Table 6. 

Table- 6: Trades Relevant to A&D Sector Where Seat Count Is Adequate

These seats, where there is adequacy, are required across the manufacturing sectors. Thus, the A&D sector has not got its sectoral attention, which it rightly deserves.

The above analysis brings out that while there are excesses in the Demand-Supply in some trades, there are shortages in many other trades. Till 2015-2016, there was an archaic system, in which the Regional Directorate of Apprentice Training (RDAT) decided for industry, the selection of trade and its number, in which industry must impart mandatory training as per the Apprenticeship Act. Despite using such Central allocation, there have been structural gaps in the Demand and Supply of Technicians with ITI qualification. However, currently, such decisions are left to the industry, which will be helpful to them in managing inflow of manpower. The defence sector must take the lead where the seat availability is less under the Apprenticeship Scheme to train the fresher to fill the gap.

Aerospace engineering is a popular and sought after choice among students…

Industrial Manpower Requirements

The Defence Institute of Advanced Studies is an autonomous Educational and Research Institute with linkages to the DRDO. This is the only institution which is open to outsiders. DIAT offers specialised/customised PG courses to meet the needs of Armed Forces, DRDO, Defence Quality Assurance, Ordnance Factories, Directorate of Aeronautical Quality Assurance and other Public Sector undertakings. In addition to the PhD and M.Tech Courses, DIAT also conducts year-long courses and a variety of specialised short-term courses. DIAT opened its gates in the year 2006 for open category students with scholarships to join its Ph.D/M.Tech programmes. However, not many students in the Open category have been availing this opportunity.

DIAT runs thirteen postgraduate courses – Aerospace Engineering (Guided Missiles), Mechanical Engineering (Combat Vehicles), Mechanical Engineering (Weapons), Mechanical Engineering (Marine), Electronics Engineering (Signals and Communication), Aerospace Engineering (Air Armament), Modeling and Simulation, Lasers and Electro-Optics, Energetic (Materials & Polymers), Mechanical Engineering (Gas Turbine Technology), Computer Science and Engineering (Cyber Security), Electronics Engineering (Radar and Communication) and Materials Engineering. The Military Institute of Training (MILIT), in the same campus, earlier a part of DIAT, erstwhile Institute of Armament Technology (IAT) , offers specialised courses such as Technical Staff Officers Course (Army), Tank Technology Course, Naval Technical Staff Course, Technical Staff Officers Course (Air Force), Aerospace Quality Assurance and Management Course, Armoured Vehicle Technology Course, Aircrew Ejection System Course, Aircraft Weapons Delivery Systems Course, Modern Air Weapons Course, Air Launched Missile Course, Marine Propulsion Control Technology Course, Naval Weapons and Missile Technology, Guided Weapons Course for Senior Officers, Deputy Armament Supply Officers Course, Guided Weapons Introductory Course for Naval, EMI/EMC Course, Quality Assurance and Reliability Engineering Course.

Between 2013 and 2015, the DIAT awarded higher education certificates to 117 students. The bulk of the students came from DRDO as sponsored candidates, filling up 61 seats. There was only one seat in the Open category. Placement wise, L&T, SCI-Com software wavelet group, Rolta India, Whirlpool India Ltd, RAC picked up seven candidates from a panel of 35 students after interview. Thus, the ability of the institute to meet the market demands in terms of quality and quantity is questionable.

The DIAT does not offer any graduate-level courses, leaving a gap in education at this level. Moreover, there are no Diploma level institutions, offering specialisation in Defence Technology. This situation has created a vacuum at the Diploma and Graduate level except for courses related to Aerospace engineering.

Aerospace engineering deals with the design, construction and maintenance of airborne equipment such as aircraft, helicopters, spacecraft, satellites, rockets and missiles, including their components. It is one of the advanced branches of engineering and works towards advancements in the fields of aviation, space exploration and defence systems. The field has been witnessing tremendous amount of research, especially in discovering new materials and structures. As an academic discipline, aerospace engineering is a popular and sought after choice among students. Hence, the competition to secure a seat in M.Tech (Aerospace Engineering) course in a reputed institute, is high.

Aerospace engineering deals with the design, construction and maintenance of airborne equipment…

The important Government Colleges offering Aerospace Engineering course in India are the Indian Institute of Aeronautical Engineering, Dehradun, Punjab Engineering College, Chandigarh; National Institute of Aeronautical Engineering, Dehradun, Madras Institute of Technology, Chennai, the Institute of Aviation Technology, Punjab, Hindustan College of Engineering, Chennai, the Indian Institute of Technology (IIT) Kanpur; IIT Chennai; IIT Roorkee; IIT Delhi; IIT Kharagpur; IIT Mumbai; IIT Guwahati and IIST, Thiruvanathapuram. Besides, there are few other Aerospace Engineering colleges in India that are worth mentioning. These are Madras Institute of Technology, Chennai; Hindustan Institute of Engineering Technology, Chennai; Nehru College of Aeronautical and Applied Sciences, Coimbatore; School of Aviation Science and Technology, Delhi; Punjab Engineering College, Chandigarh and the Indian Institute of Aeronautics, Patna.

There are nine Diploma Aeronautical Engineering colleges in India offering courses, which are worth mentioning. These are SCT Institute of Technology Bangalore; Bhubaneswar Engineering College Bhubaneshwar; Acharya Polytechnic Bangalore; Gurukul Vidyapeeth Institute of Engineering and Technology Patiala; Delhi Institute of Aeronautical Sciences Delhi; Hindustan Electronics Academy, Bangalore; International Council for Management Studies (ICMS) Chennai; Karavali Polytechnic Mangalore and Hi-Tech Institute of Information and Technology, Koraput.

Quality of Engineering Courses

The All India Council for Technical Education (AICTE) is contemplating bringing down the engineering seats to between 10 lakh and 11 lakh from a little over 16.7 lakh now as many engineering colleges lack proper infrastructure and most of their students, taught by poor quality teachers, gain few employable skills at the end of the four years they spend to get a degree (Nanda, 2015).

According to a report by ‘Aspiring Minds’, an education assessment company, the employability of engineering graduates in various states ranges between 12 and 42 per cent. Only 18.43 per cent of the engineers are employable in software engineering-IT services. For jobs in mechanical, electronics/electrical and civil engineering, a mere 7.49 per cent are employable. A survey by Nasscom brings out that 17.5 per cent of engineering graduates were deemed employable in a 2011. India’s IT industry spends nearly $1 billion a year to make them job-ready (Nanda, 2015).

‘Dual training’ is the core of the model which drives the successful model…

Student intake at the undergraduate level in engineering colleges started picking up from 2006-2007. From 659,717 engineering seats in 2006, it jumped to 1.22 million in 2010 and over 1.67 million in 2015. India has more than 3,470 engineering colleges. However, for the first time in several years, in 2015, the overall number of engineering seats has come down by about 30,000 in 2015, according to AICTE (Nanda, 2015). The heat of the market is being felt. Quantity is being sacrificed for quality. With the pressure on quality mounting on educational institutions, it is expected that systems will improve due to Government intervention.

International Best Practices

The backbone of the technology-driven defence sector manufacturing lies in skills and technical abilities of the workforce. Thus, there is no substitute to trained manpower in the defence sector. Estimates suggest that almost 50 per cent of the workforce in this sector is constituted by engineers and management graduates. “Countries like France have developed highly regarded specialist schools like Institut Superier de l’Aeronautique et de l’Espace (ISAE) and Ecole Nationale de l’AviationCivile (ENAC) in Toulouse and Ecole Nationale Superieure de Mecnique et d’Aerotechnique (ENSMA) in Poitiers to train engineers for this field. As the French industry grew, substantial investments were made in the form of professional federations such as Groupement des Industries Francaises Aeronautiqueset Spatiales (GIFAS) to promote the interests of this sector. With a pool of 134,000 specialist employees, the French Aerospace and Defence industry today is clearly a European leader”. (KPMG, 2011)

Thus, a focused skill development policy for this sector is the need of the hour. Wherever there are defence clusters such as Pune, Bengaluru, Kanpur, Chennai, Hyderabad or defence Special Economic Zones (SEZs), all the organisations in these clusters can come together for a skilling initiative with support from National Skill Development Corporation (NSDC).

There is a need for the Academic-Industry-Research collaboration in these clusters, which can help in the speedy development of this emerging sector. Another successful model worth emulating is the Model of Apprenticeship Training in Germany. The base of the successful manufacturing industry in Germany is built on the fine and firm foundation of Apprenticeship Training. This is a highly respectable career path. While in America, less than five per cent of young people train as apprentices. In Germany, the number is closer to 60 per cent – in fields as diverse as advanced manufacturing, IT, banking and hospitality.

‘Dual training’ is the core of the model which drives the successful model. ‘Dual training’ captures the idea at the heart of every apprenticeship; trainees split their days between classroom instruction at a vocational school and on-the-job time at a company. The theory they learn in class, is reinforced by the practice at job. They also learn work habits and responsibility and, if all goes well, absorb the culture of the company. Trainees are paid for their time, including in class. The arrangement lasts for two to four years, depending on the sector. And both employer and employee generally hope it will lead to a permanent job – for employers; apprentices are a crucial talent pool.

Both employers and employees in Germany want more from an apprenticeship than short-term training. As the industry knows that there will be robots to turn the screws, they do not train workers for that. They train workers who can solve problems, who are skilled, thoughtful, self-reliant employees who understand the company’s goals and methods and can improvise when things go wrong or when they see an opportunity to make something work better. In India, although a Director General Training (DGT) has been setting up Centre for Excellence based on the National Skills Qualifications Framework (NSQF) with third party administration of assessment, there is a long way to go before impacts are seen in the quality of the ITI graduates.

Attracting and Nurturing Talent

The Defence Research and Development Organisation (DRDO) has been facing attrition of scientists. The number of scientists who resigned from the DRDO from the period 2009 to 2013 is 65, 63, 86, 67 and 57 respectively per year. Scientists, who have resigned, indicated their personal/domestic grounds as the reasons for leaving DRDO. However, the fact is that they have left as there are better opportunities/incentives available in other organisations/industries (Rajyasabha, 2015). As the market grows, there will be more manpower churnings in the industry, which demands organisations must work out a credible strategy for their Talent Management.

Attracting talent is the first step in Talent Management. The best way for A&D companies to address their long-term needs is to work at changing the way the millennial generation views manufacturing jobs. Entry level talents are more attracted to the glamour of IT sector rather than core sector of manufacturing.

Finding talent with the required skills is only part of the solution. Manufacturers should develop talent through talent management and development programmes by giving existing workers the specific skills required for changing manufacturing needs. A recent initiative in skill development by Hindustan Aeronautics Limited (HAL) by setting up schools in collaboration with the Indian Institute of Science Bangalore (IISC) is a step in the right direction. Formal career development programmes and competency modeling-based recruitment, training and promotion can power the momentum of internal development efforts. It is critical that companies develop an innovative workforce plan, create a talent pipeline and engage both current and future employees using proven HR tools and leveraging technology to help recruit and retain talent.

While there is no single solution, there are some demonstrated methods manufacturers can take to mitigate the growing skills gap. Knowledge management solutions can address the brain-drain as older workers retire, taking with them valuable knowledge and experience. Capturing critical information and sharing it with younger entrants helps reduce training time can improve collaboration and communication, and even speed time to market. Older workers can mentor younger colleagues acquire knowledge and skills. Thus, a holistic approach to talent management can pay dividends in the medium to long term.

Conclusion

It is axiomatic that talent is the lifeblood of all successful businesses and industries. But for the A&D sector, the availability of engineering talent is becoming an acute challenge. Indeed, dearth of talent continues to weigh on India’s nascent defence and aerospace industry. The analysis above presents a gloomy picture of the state of affairs. There are serious gaps in the talent spectrum in the A&D sector. While there are not enough seats available in some of the critical trades, at the same time, seat utilisation is less than 100 per cent in some of the important trades. There are regional variations in the demand-supply gap with concerns for the Western region for industrial manpower. There are negligible opportunities at the higher end (PG and above). There are almost no specialised courses at Graduate and Diploma level in Defence Engineering and Technology. The quality of the courses offered is not up to the expectations of the industry. There are placement issues concerning to the only technical institutions that offer specialised courses in defence technology, raising questions about the credibility of such courses.

Few countries have been able to develop an independent, local defence industry. Most lack the complex, interdependent capabilities in research, industry and organisation needed to design and produce state-of-the-art defence materiel. As a result, they spend significant budget to import equipment or assemble under license. Thus for ‘Make-in-India’ dream to be successful, it must address the skill challenge by joint public-private efforts with the Government taking the lead through Skilling India efforts for defence sector.

References

1. EY, 2016, “Enabling talent to drive innovation in aerospace and defense”, www.ey.com, http://www.ey.com/Publication/vwLUAssets/EY-enabling-talent-in-aerospace-and-defense/$FILE/EY-enabling-talent-in-aerospace-and-defense.pdf, last accessed in 6th November 2016, last accessed on 6 Nov 2016.

2. GOI, 2016, Make in India Site of GOI, (http://www.makeinindia.com/sector/defence-manufacturing.

3. KPMG, 2012, “Unlocking the Potential of Defence Sector”, 11 Press Release, Aerospace subcontracting in France: Opportunities for Foreign investors Invest in France Agency.

4. Kumar, Vivek. & Kapoor, Radhika. 2015, “The Nuts and Bolts of Skill Development”,http://www.thehindu.com/opinion/op-ed/the-nuts-and-bolts-of-skill-development/article7020970.ece), March 23, 2015, last accessed on 6 Nov 2016

5. Mithel, Manasi, 2012, “Defence Alarm”, Business Today, Sep 30, 2012, http://www.businesstoday.in/magazine/careers/defence-aerospace-sector-faces-acute-talent-deficit/story/187962.html, last accessed on 6 Nov 2016.

6. Nanda, P.K, 2015, “AICTE to Cut Number of Engineering College Seats by 600,000” (http://www.livemint.com/Politics/BphkOxYuir6OaYcTrBtldJ/AICTE-to-cut-number-of-engineering-college-seats-by-600000.html, 25 Sep 2015, last accessed on 6 Nov 2016.

7. PwC and Workday, 2015, “Revitalizing the Way Aerospace & Defense Companies Manage Talent and Financials”, http://www.pwc.com/us/en/increasing-it-effectiveness/workday-business-applications/publications/assets/pwc-workday-aerospace-defense.pdf, last accessed on 6 Nov 2016

8. Rajyasabha, 2015 ,http://164.100.47.134/lsscommittee/Defence/16_Defence_9.pdf in, http://www.idsa.in/resources/parliament/QNo327Resignation%20ofscientistsfromDRDO, last accessed on 6 Nov 2016.

9. Sanjai, P.R, 2015, “Indian Aerospace Sector Needs One Million Skilled Workforce in Next 10 Years”, Livemint, 20 Feb 2015, http://www.livemint.com/Politics/hRJQjq7ZKVXQ5RFkzWbmAJ/Indian-aerospace-sector-needs-one-million-skilled-workforce.html, last accessed on 06 Nov 2016.

10. Tamar Jacoby, “Why Germany Is So Much Better at Training Its Workers”, https://www.theatlantic.com/business/archive/2014/10/why-germany-is-so-much-better-at-training-its-workers/381550/, 16 Oct 2014, last accessed on 27.1.2017.

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Skilling Gaps in Defence Sector for ‘Make in India’, 5.0 out of 5 based on 4 ratings
The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Dr JP Dash & BB Sharma

Dr JP Dash is an officer belonging the Indian Ordnance factories and is current Addl General Manager at Ordnance Factory Khamaria and BB Sharma is an Ex-IOFS officer, who had headed Ordnance Factory Bhusawal as General Manger.

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