New Delhi: Late Wednesday evening, the government approved a long-pending proposal to restructure the nearly 200-year-old Ordnance Factory Board that operates 41 ammunition and defence equipment production facilities into seven separate corporate entities to improve its accountability, efficiency and competitiveness.
Describing it as a "historic decision", Defence Minister Rajnath Singh said there will be no change in service conditions of nearly 70,000 employees of the organisation and the decision is driven by efforts to boost India's defence manufacturing sector.
"It is a big decision that complements India's national security requirements. It will help in achieving our targets for defence production. There will be no change in service conditions of the employees," he told a small group of journalists.
They said the reform process is being implemented as part of Prime Minister Narendra Modi's vision for self-reliance in the defence sector. To help in decision making on the matters related to implementation of the government’s decisions taken on Wednesday as well as other incidental matters, Empowered Group of Ministers has been constituted under the minister of defence, Rajnath Singh has been set up.
Officials said the seven entities will include an ammunition and explosives group, vehicles group, weapons and equipment group, 'troop comfort items group', ancillary group, optoelectronics group and parachute group. Each of the seven entities will be like any other defence public sector undertaking (DPSU) and they will be operated by professional management.
Now, all the employees of OFB (Group A, B & C) who belong to the various production units are going to be transferred to the corporate entities on deemed deputation. The deputation will initially be for two years and there will be no changes in their service conditions as central government employees.
According to the minister who will be heading the Empowered Group of Ministers, such a move will help in improving the efficiency as well as accountability. And will allow these companies autonomy.
This decision to restructure is aimed at turning the Ordnance Factories into assets which are profitable; which will help in improving the quality of the platforms and products and are cost effective. The restructuring is expected to help in enhancing competitiveness and further deepening specialization in the product range.
With the government focusing on export of defence items/platforms made in India, the new structure will help in overcoming several shortcomings in the existing system. And to also create opportunities in the global market.
The major customers of these OFs are the Indian Armed forces. Other customers include Paramilitary Forces; State Police Forces who procure their clothing, vehicles which are bulletproof and mine protected from the OFs. Also these forces procure their small arms and ammunition from OFB.