61,597 Defence Civilian Employees Get Relief After Cabinet Secretary’s Assurance at JCM Meeting – Indian PSU

In a significant development, 61,597 Defence Civilian employees of the erstwhile Ordnance Factory Board (OFB) have received major relief following an assurance by the Cabinet Secretary during the 49th meeting of the National Council – JCM held on May 11, 2026.

Background: Corporatisation and Employee Concerns

In 2021, the Government of India abolished the OFB—comprising 41 Ordnance Factories—and corporatised it into seven Defence Public Sector Undertakings (DPSUs). As part of the transition, employees were placed on deemed deputation to these DPSUs starting October 1, 2021, for an initial period of two years, with full protection of their service conditions.

However, the move was strongly opposed by employee unions, particularly the All India Defence Employees Federation (AIDEF), which challenged the decision in the Madras High Court.

Legal Stand and Government Assurance

AIDEF argued that corporatisation violated earlier assurances by successive governments and altered the status of employees from Central Government staff to PSU personnel.

During the hearing, the government assured the court that:

• Employees would continue as Central Government employees
• Permanent absorption into DPSUs would be purely voluntary

The Ministry of Defence reiterated this stance in its affidavit, and the High Court, in its judgment dated July 29, 2024, accepted these assurances.

Employees Resist Absorption

Following the judgment, a majority of employees opted against permanent absorption into DPSUs, expressing their desire to retain Central Government status until retirement.

Subsequent attempts by DPSUs to initiate absorption discussions failed after employee unions boycotted meetings, demanding a formal notification safeguarding their status.

Breakthrough at JCM Meeting

The issue was strongly raised during the 49th National Council (JCM) meeting chaired by the Cabinet Secretary.

Speaking to www.indianpsu.com, C. Srikumar, General Secretary of AIDEF and JCM member, said: “Even after five years of corporatisation, the government has not issued a notification to protect the service status of employees. This is against the assurance given before the Madras High Court.”

Cabinet Secretary’s Assurance

Responding to the concerns, the Cabinet Secretary assured that:

• A Committee of Secretaries will recommend to the Empowered Group of Ministers (EGoM)
• The deemed deputation of employees will be extended till retirement
• Employees will continue as Central Government / Defence Civilian employees

This assurance has been welcomed as a major victory by employee unions.

Additional Direction: Compassionate Appointments

The Cabinet Secretary also directed the Department of Defence Production to:

• Consult the Law Ministry
• Expedite a decision on lifting the ban on compassionate appointments for dependents of deceased employees

Union Reaction

AIDEF termed the development as a result of:

• Sustained legal efforts
• Strong unity among defence civilian employees

C. Srikumar expressed gratitude to all stakeholders and urged the government to issue the formal notification without delay.