The Cabinet Committee on Security (CCS) on June 16, 2021 approved to convert Ordnance Factory Board (OFB) into government owned corporate entities.
Why to Corporatise OFB?
- It was recommended by the committees on Defence reforms, setup by the governments between 2000 and 2015. E.g.,T.K.A. Nair Committee, Dr. Vijay Kelkar Committee, Raman Puri Committee and theShekatkar Committee.
- It is proposed to get rid of monopoly supply, quality issues, high cost of incidentals and overheads lack of innovation and low productivity as highlighted by the Comptroller and Auditor General (CAG) in its report in 2019.
About Corporatisation of OFB
- The factories of OFB (41 in number) will be dissolved into seven new Defence Public Sector Undertakings (DPSU) to be owned fully by the Government of India.
- Each new entity will be responsible for different verticals. For instance –
- Ammunition and Explosives Group for production of ammunition.
- Vehicles group for defence mobility and combat vehicles.
- Weapons and Equipment Group to make small, medium and large calibre guns for security forces.
- Troop combat group to engage in production of uniforms and specialized gear for troops.
- Ancillary group
- Opto Electronics group
- Parachute Group
- New entities will function like any other defence public sector undertaking (DUSU) like Hindustan Aeronautics Ltd. or Bharat Electronics limited.
- OFB employees in the production units will be transferred to new entities on a deemed deputation initially for a period of two years.
Figure:Ordnance Factory Board (OFB) Set-up
The corporatization of OFB is likely to transform ordnance factories into corporate entities thereby improving accountability and efficiency. The restructuring aims to make the country self-sufficient in defence manufacturing. However, the government must address and allay the fears/concerns raised in this regard.