Cabinet approves Ordnance Factory Board formation | Latest India News
NEW DELHI: The Union Cabinet, led by Prime Minister Narendra Modi, on Wednesday approved the corporatization of India’s premier arms and military equipment manufacturer, the Ordnance Factory Board (OFB), to increase its effectiveness and competitiveness in a long-awaited reform of the country’s defense manufacturing industry, said senior officials familiar with developments.
The OFB, which controls 41 arms factories, will be split into seven state units that will manufacture ammunition and explosives, vehicles, weapons and equipment, troop comfort items, optoelectronic equipment, parachutes and auxiliary products, said one of the officials quoted above on condition of anonymity.
Ordnance factories currently produce tanks, armored personnel carriers, anti-mine vehicles, bombs, missiles, artillery pieces, anti-aircraft guns, parachutes, handguns, clothing and leather equipment for soldiers.
“The restructuring will turn arms factories into productive and profitable facilities, deepen product specialization, increase performance and improve quality, cost-effectiveness and accountability,” said a second official. He said it was a big step towards self-employment in arms production.
The government expects the seven new, professionally managed units, which are expected to be added by the end of the year, to increase their market share domestically through better capacity utilization and also open up new export opportunities.
“The new structure will help overcome various shortcomings in the existing OFB structure by eliminating inefficient supply chains and providing an incentive for these companies to become competitive. It will also strengthen their autonomy, ”said the first official.
Over the past two decades, various high-level committees have emphasized the need to improve the functioning of the OFB and transform its factories into autonomous vehicles for the country’s defense readiness.
Defense Minister Rajnath Singh described the decision to embody the OFB as “historic”.
“It’s also a big decision from a national security perspective,” said Singh.
The factories controlled by the board of directors employ at least 70,000 people who have spoken out against the move to start a business. Three civilian workers’ associations of the OFB Ministry of Defense announced a joint strike last August against the government’s plans to corporation the board.
The workers’ unions canceled their planned nationwide strike last year after a reconciliation meeting.
Singh said the conditions of service of OFB staff would not change and the government had a duty to safeguard their interests.
All OFB employees (Groups A, B and C) from different production units will be transferred to the corporate units for an initial period of two years without changing their terms of service as government employees, the Hindustan Times has learned.
“The pension liabilities of retirees and existing workers will continue to be borne by the state,” said the second official named above.
An Plenipotentiary Group of Ministers (EGoM) formed under the Secretary of Defense last year will oversee the body of the Bureau and also take decisions on other related matters, the official added.
An internal army investigation last year revealed concerns about defective ammunition and armament in the OFB, causing losses to the army and bleeding in the treasury. 403 accidents in the last six years resulted in the death of 27 soldiers and the loss of ₹960 million.
“Lack of accountability and poor quality of production lead to frequent accidents. This leads to injuries and death of soldiers. On average, there is one accident per week, ”according to the internal assessment.
The OFB reacted to the assessment of the armed forces as factually wrong.
In 2017, the government cracked down on 13 Department of Defense bureaucrats from the Indian Ordnance Factories Service for repeated failures by arms factories to cover ammunition shortages and poor product quality.
The Comptroller and Auditor General also raised questions about the quality of the products delivered by the OFB and the overall performance in his reports.