Ordnance Factory Board to be split into 7 entities

New Delhi: In a major decision, the Union Cabinet on Wednesday approved the corporatisation of the country’s main producer of weapons and military equipment, Ordnance Factory Board (OFB), under which it will be split into seven government-owned corporate entities that will be run by professional management. The existing 41 factories under the OFB will now be subsumed into seven corporate entities.

“Today’s decision would allow these companies autonomy as well as help improve accountability and efficiency in the functioning of 41 factories under the new companies,” a source said.

The Ordnance Factory Board is currently a subordinate office under the ministry of defence.

The functioning of the Ordnance Factory Board has come in for scrutiny by various high-level committees in the last two decades with the aim of improving their functioning and making these factories vehicles of self-reliance for defence preparedness.

Among the seven entities, the Ammunition and Explosives group will be mainly engaged in production of ammunition of various calibres and explosives. The government believes it will have a huge potential to grow exponentially, for Make in India and also by making for the world.  

The second entity, the Vehicles group, will mainly engage in production of defence mobility and combat vehicles such as tanks, trawls, BMPs and mine-protected vehicles. 

The third entity, the Weapons and Equipment group, would be mainly engaged in the production of small arms, medium and large calibre 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, the Troop Comfort Items group, the Ancillary group, Opto-Electronics group and Parachute group constitutes the entire structure.

“The structure would help in overcoming various shortcomings in the existing system of OFB by eliminating inefficient supply chains and provide these companies incentives to become competitive and exploring new opportunities in the market including exports,” the source said.

This restructuring is also aimed at transforming the Ordnance Factories into productive and profitable assets, deepen specialisation in product ranges, enhance competitiveness, improving quality and cost-efficiency, the source said.

In taking this decision, the government has ensured that the service conditions of the existing Central government employees of the OFB are protected. The government has decided all 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 retirees and existing employees will continue to be borne by the government.

The government has also decided to delegate the Cabinet’s authority to the Empowered Group of Ministers, constituted under defence minister Rajnath Singh, to decide on the matters relating to the implementation of the government’s decisions on OFB and other incidental matters.