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GS-III : Economic Issues Defense industry

17 June, 2021
15 Min Read

Ordnance Factory Board corporatised

About Ordnance Factory Board

Ordnance Factory Board (OFB) consisting of the Indian Ordnance Factories is a Government agency under the control of the department of defence production (DDP) Ministry of Defence (MoD), Government of India.
It is engaged in research, development, production, testing, marketing and logistics of a product range in the areas of air, land and sea systems.
OFB comprises 41 ordnance factories, 9 training institutes, 3 regional marketing centres and 4 regional controllers of safety, which are spread all across the country.
Currently, the Kolkata-headquartered OFB functions as a department under the Department of Defence Production.
Every year, 18 March is celebrated as Ordnance Factory Day in India.
OFB is the world's largest government-operated production organisation, and the oldest organisation in India (Prelims).
It has a total workforce of about 80,000.
It is often called the "Fourth Arm of Defence", and the "Force Behind the Armed Forces" of India.
OFB is the 35th largest defence equipment manufacturer in the world, 2nd largest in Asia, and the largest in India.

Historical Perspective

The first Indian ordnance factory can trace its origins back to the year 1712 when the Dutch Ostend Company established a Gun Powder Factory in Ichhapur.
This is the oldest ordnance factory in India still in existence.
The Indian Ordnance Factories have not only supported India through the wars but played an important role in building India with the advancement of technology and have ushered the Industrial Revolution in India starting with the
1. the first modern steel plant of India much before Tata Steel,
2. first modern electric textile mill of India,
3. first chemical industries such as smokeless propellant plants of India,
4. established the first engineering colleges of India as its training schools,
5. played a key role in the founding of research and industrial organisations like ISRO, DRDO, BDL, BEL, BEML and SAIL.

Corporatisation of OFB

Cabinet approved a plan to corporatise the Ordnance Factory Board (OFB), which has 41 factories, into 7 fully government-owned corporate entities on the lines of Defence Public Sector Undertakings (DPSU).
Once implemented, the OFB, the establishment of which was accepted by the British in 1775, will cease to exist.

Impact of this decision

It is a major decision in terms of national security and also makes the country self-sufficient in defence manufacturing.

This move would allow these companies autonomy, as well as help, improve accountability and efficiency.
This restructuring is aimed at transforming the ordnance factories into productive and profitable assets, deepening specialisation in the product range, enhancing competitiveness, improving quality and achieving cost efficiency.
All employees of the 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.
The pension liabilities of the retirees and existing employees would continue to be borne by the government.

Source: TH

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