NEW DELHI: Marking a major shift in defence production, the Union Cabinet Committee on Wednesday confirmed the corporatisation of the Ordnance Factory Board (OFB) -- India’s main producer of weapons and military equipment.
Confirming the development, official sources said, "This move would allow these companies autonomy as well as help improve accountability and efficiency".
Allaying the fears of the employees, the source further added, "The government is committed to safeguard the interests of the employees of OFB. It has been decided that all the employees of OFB (Group A, B & C) belonging to the production units would be transferred to the corporate entities on deemed deputation initially for a period of two years without altering their service conditions as central government employees.
The pension liabilities of the retirees and existing employees will continue to be borne by the Government.
This restructuring is aimed at transforming the Ordnance Factories into productive and profitable assets, deepen specialization in the product range, enhance competitiveness, improve quality and cost-efficiency.
Ordnance Factory Board of the 41 companies, currently a subordinate office of the Ministry of Defence, will be converted into seven government owned corporate entities with professional management focusing on specific production.
Ammunition & Explosives group would be mainly engaged in production of ammunition of various caliber and explosives with huge potential to grow exponentially, not only by way of Make in India but also by Making for the World.
Vehicles group would mainly engage in production of defence mobility and combat vehicles such as Tanks, Trawls, BMP and Mine Protected Vehicles is expected to increase its share in the domestic market through better capacity utilization and also explore new export markets.
Weapons & Equipment group would be mainly engaged in production of small arms, medium and large caliber Guns and other weapon systems and is expected to increase its share in the domestic market through meeting domestic demand as well as product diversification.
In addition, Troop Comfort Items group, Ancillary group, Opto-Electronics group and Parachute group constitutes the entire structure.
Apart from the Armed Forces, OFB also supplied, Arms, Ammunition, protective gears, parachute, clothing etc to the Paramilitary Forces, CAPFs, State Police.
The functioning of Ordnance Factory Board has come in for study by various High-Level Committees over the last two decades with the objective to improve their functioning and making these factories as vehicles of self-reliance for defence preparedness of the Armed Forces.
The above structure would help in overcoming various shortcomings in the existing system of OFB by eliminating inefficient supply chains and provide these companies incentive to become competitive and exploring new opportunities in the market including exports.
The Government has also decided to delegate the authority of the Cabinet to the Empowered Group of Ministers, constituted under the Minister of Defence, to decide upon the matters related to implementation of aforesaid Government decisions and other incidental matters.
The OFBs originated in 1775 as British authorities accepted the establishment of Board of Ordnance in Fort William, Kolkata. In 1787 a gun powder factory was established at Ishapore which started production from 1791. There were 18 ordnance factories before India became independent in 1947.