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India to change the way it makes weapons, gives nod to break up Ordnance Factory Board

As per the plan, a total of seven separate companies will be carved out of the Ordnance Factory Board and each would have a specific manufacturing role.

India to change the way weapons are made in India, gives nod to break up Ordnance Factory Board-VPN
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New Delhi, First Published Jun 17, 2021, 2:22 PM IST
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The Union Cabinet has given the approval for the corporatisation of the Ordnance Factory Board (OFB) to boost its efficiency and competitiveness in the global market

Sources said that the decision was taken by the Cabinet committee headed by Prime Minister Narendra Modi.

OFB is the main producer of weapons and military equipment in the country. Set up in 1775 by Britishers, the OFB will now cease to exist.

As per the plan, a total of seven separate companies will be carved out of the Ordnance Factory Board and each would have a specific manufacturing role.

Currently, there are 41 factories under the OFB. All these factories will be subsumed under the seven new companies.

The move would allow these companies to operate autonomously and help improve accountability and efficiency, the source said. 

"This restructuring is aimed at transforming the Ordnance Factories into productive and profitable assets; deepen specialization in the product range; enhancing competitiveness; improving quality and cost-efficiency," he said.

Presently, there are around 70,000 employees and as per the plan, their interests will be safeguarded.

All employees of 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 source added.

The functioning of the 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 existing 41 factories would be subsumed into 7 corporate entities. The explosives group would be mainly engaged in the production of ammunition of various calibre, not just under the Make in India model but also the 'Making for the World' perspective.  

The vehicles group would be tasked with manufacturing defence mobility and combat vehicles such as tanks, BMP and mine-protected vehicles. The company is expected to increase its share in the domestic market through better capacity utilization and also explore new export markets.

Weapons and equipment group would mainly be engaged in the manufacture 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. 

The remaining 4 corporate entities will deal with troop comfort items, ancillary products, optoelectronics products and parachutes.

The creation of 7 companies would help in overcoming various shortcomings in the existing operations of the OFB by eliminating inefficient supply chains, sources said. 

This would provide these companies incentive to become competitive and exploring new opportunities in the market including exports.

As per the plan, the pension liabilities of the retirees and existing employees will continue to be borne by the government.

The Government has also decided to delegate the authority of the Cabinet to the Empowered Group of Ministers, constituted under Defence Minister Rajnath Singh, to decide upon the matters related to the implementation of the decisions and other incidental matters.

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