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Current Affairs

Dismantling Ordnance Factory Board

Date: 04 October 2021 Tags: Miscellaneous

Issue

The Ordnance Factory Board (OFB) will cease to exist from October 1. The assets, staff, and operations of its ordnance factories will be transferred to seven defence public sector units (DPSUs).

 

Background

The first industrial establishment of the Ordnance Factory Board (OFB) was set up in 1801. Recently the government had planned to dissolve it.

 

Details

The OFBs also include nine training institutes, five regional controllers of safety, and three regional marketing centres. The government has gone ahead in its plan even after facing strong protests from workers.

 

 

Products supplied from OFB

  • Civilian and military-grade arms and ammunition

  • Propellants and chemicals for missile systems

  • Explosives

  • Armoured vehicles

  • Military vehicles

  • Optical and electronic devices

  • Parachutes

  • Support equipment

  • Troop clothing

  • General store items for the armed forces

 

Significance

The OFB –run factories are the main suppliers of weapons, ammunition, and supplies used by the armed forces, and paramilitary and police forces.

 

Reasons for restructuring

  • Converting OFBs into corporate entities was recommended by various committees in different forms. They include TKS Nair Committee (2000), Vijay Kelkar Committee (2005), and Vice Admiral Raman Puri Committee (2015).

  • The Lt Gen D B Shekatkar committee recommended regular audits of all ordnance units considering past performance but not corporatization.

 

Government’s arguments

The new structure will bring the entities under the purview of The Companies Act, would lead to improvements in efficiency, enhance their quality, and make products cost-competitive.

 

Concerns associated with existing structure

It has led to innovation drying up, high costs of production, low productivity, and lack of flexibility at the higher managerial levels. They could not even retain profits.

 

New successor entities

  • Munitions India Ltd

  • Armoured Vehicles Nigam Ltd

  • Advanced Weapons and Equipment India Ltd

  • Troop Comforts Ltd

  • Yantra India Ltd

  • India Optel Ltd

  • Gliders India Ltd