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ORDNANCE FACTORY BOARD - Shanmugam IAS academy, coimbatore


What’s in news?

A high-level committee was appointed to examine the aspects of corporatization of the Ordnance Factory Board (OFB).

Key data’s:

  • The Government is set to form a high-level committee to examine the aspects of corporatization of the Ordnance Factory Board (OFB) and work out the modalities, defence sources said while rejecting apprehensions from employees that there is an attempt at privatization.
  • The appointed high-level committee to draw up a road map for turning government-controlled ordnance factories and will study the issue and take a call on what needs to be done.
  • This is a step to increase their efficiency, sharpen their competitive edge and expand their export potential.
  • The defence ministry will approach the Union cabinet soon for setting up of the committee
  • Corporatization of ordnance factories is not for the first time, as being it is considered many times since many decades.
  • Corporatization of OFB will reduce import dependence and enhance combat efficiency of the armed forces.

Need for corporatization:

  • If OFB continued at the current rate and in the present model it has no future.
  • Accountability and the work efficiency were not there in the present state.
  • Need is to move to a system of accountability on the lines of DPSUs.
  • The products are of high cost.
  • Lack or minimal innovation in the factories.

Existing problem:

  • The present structure of OFB is “restrictive” and “needs drastic reforms” to ensure it has a future.
  • For instance, any expenditure beyond Rs 10 crore by OFB needs to be cleared by both the organization’s bureaucracy and the defence finance wing under the defence ministry, leading to unnecessary delays in decision making.
  • To prove this above accusation, a new ordnance factory to be set up in Nalanda in Bihar, cleared by the Atal Behari Vajpayee government in 2000, at cost of Rs 900 crore, hasn’t come up yet.

Ordnance Factory Board (OFB):

  • With 41 factories, it spread across the country functions under the Department of Defence Production.
  • OFB which supply arms and ammunition and other equipment to the armed forces.
  • Due to this every decision and action needs the approval of the Cabinet.
  • The Indian Army is the main consumer of OFB, which has an annual budget of around Rs 15,000 crore; salaries and other overhead costs account for nearly Rs 5,000 crore more.

Recent strike:

  • Unhappy with the move, about Ordnance factory’s 60,000 industrial workers have gone on a month-long strike against the handing over of the ordnance factories of the country to the corporate sector.
  • Handing over the OFBs to the corporate sector might put the national security in danger.


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