Government Decision To Split Ordnance Factory Board Into 7 Entities

The government has approved the proposal to restructure the nearly 200-year-old Ordnance Factory Board that operates 41 ammunition and military equipment production facilities into seven state-owned corporate entities to improve its accountability, efficiency and competitiveness.

The decision to corporatise the OFB on the lines of defence public sector undertakings was taken at a meeting of the union cabinet chaired by Prime Minister Narendra Modi, nearly two decades after the reform measure was first mooted to bring professionalism and significantly enhance its productivity, officials said.

Officials said the seven entities are likely to take shape by the year’s end and they will be operated by professional management with a larger goal of enhancing the product range, increase competitiveness and improve cost-efficiency.

“This restructuring is aimed at transforming the ordnance factories into productive and profitable assets, deepening specialisation in the product range, enhancing competitiveness and improving quality and cost-efficiency,” said an official.

The new entities will produce ammunition and explosives, weapons and equipment, vehicles, troop comfort items, optoelectronics equipment, parachutes and ancillary products, the officials said, adding the reform process is being rolled out as part of the prime minister’s vision for self-reliance in the defence sector.

“All employees of OFB (Group A, B and 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,” said sources.

The pension liabilities of the retired and existing employees will continue to be borne by the government, according to the Cabinet decision.

At present, the OFB functions under the department of defence production of the Ministry of Defence.