Description

The Ordnance Factory Board (OFB), which provides arms, ammunition, and clothing to the Indian armed forces, will be dissolved on October 1, 2021. OFB's 41 factories will be divided into seven new corporate entities, according to the Centre. The OFB is India's primary manufacturer of weapons and military equipment.

On June 16, 2021, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved the division of the board into seven new corporate entities. Vehicles, ammunition and explosives, weapons and equipment, opto-electronics gear, troop comfort items, parachutes, and ancillary products will be manufactured by the seven new government-owned corporate entities. 

The reason to dissolve Ordnance Factory Board

The central government announced that the OFB's corporatization would improve autonomy, accountability, and efficiency in ordnance supplies. The move was made to improve efficiency and competitiveness in the country's defence manufacturing sector, as well as to convert the assets of the ordnance factories into more productive and profitable assets. OFB's division into seven new corporate entities is expected to increase product specialisation, improve quality, and boost performance, accountability, and cost-efficiency.

The assets and employees of OFB (Groups A, B, and C) will be transferred to the seven new entities. This will ensure that existing central government employees' jobs are not jeopardised. Employees will be transferred to corporate entities on deemed deputation for a two-year period without changing their service conditions as Central government employees. The center will also continue to bear the retirees' pension liabilities. Each of the new seven entities will be required to develop rules and regulations governing the employment conditions of the absorbed employees.

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