The Indian Ministry of Defence has initiated dialogue with the employees of the Ordinance Factory Board (OFB) regarding the body’s corporatisation. A press release by the Press Information Bureau (PIB) dated June 5, 2020 stated that the High Level Official Committee (HLOC) of Department of Defence Production (DDP), Ministry of Defence (MoD) took an initiative to commence dialogue with employees’ federations/unions to address their concerns regarding corporatisation of Ordnance Factory Board (OFB).

The Committee, headed by Additional Secretary (DDP) L. Kantha Rao along with senior MoD and Army officials, held a host of meetings through video conferencing with three such associations -Confederation of Defence Recognised Associations (CDRA), Indian Ordnance Factories Gazetted Officers Association (IOFGOA) & National Defence Group-B Gazetted Officers Association (NDGBGOA) wherein, the intent of the Government to implement aforesaid decision with involvement of all the stakeholders was conveyed and suggestions were invited from the association members on ways to safeguard the benefits/interests of employees in terms of wages, salary, retirement benefits, health facilities and other service matters, etc., while converting the OFB into one or more 100 per cent Government owned corporate entities.

The press release also mentioned that suggestions were sought on the OFB concern regarding future orders and budgetary support needed from the Government for the new corporate entity/entities.

On May 16, 2020, Finance Minister Nirmala Sitharaman announced a number of reforms related to aerospace, defence and space industries which included clearance to increase foreign direct investment (FDI) in defence to 74% from 49%, the opening of the space sector to private players, rationalization and opening of airspace over India and corporatization of the Ordnance Factories Boards (OFB). The Indian government confirmed on May 16, that it would reform the OFB through corporatisation, with the intent to improve the defence factories’ “autonomy, accountability, and efficiency”.

A Defence Ministry note for Cabinet Committee on Security (CCS) had earlier observed that the OFB has largely remained as a production centre with transfer of technology from foreign Original Equipment Manufacturers (OEMs) and according to a rough estimate, nearly 75 to 80 percent of the production by the OFB units is based on imported technology while the capacities in the factories remain underutilised.

Indian Defence Minister Rajnath Singh hailed the decisions and said that the move would “unleash true potential of the Indian defence production capabilities through Make in India”. He said that the decision “will prove to be game-changer,” adding that these measures would help in “unshackling” the economy.

“Corporatization of the Ordnance Factory Board (OFB) has been the topmost priority of the government. Corporatization will improve efficiency of our Ordnance supplies and factories”, said the Indian Defence Minister.

The Confederation of Indian Industry (CII) also supports the measures of reducing imports and building self-reliance in defence. “The stress laid on domestic manufacturing is very encouraging as India today is among the largest importers in the world of defence equipment. The list of non-importable items and corporatisation of OFB are some landmark steps and will boost the confidence of domestic manufacturers,” CII Director General Chandrajit Banerjee said in a statement.

Indian Ordnance Factories is the oldest and the largest industrial setup which functions under the Department of Defence Production of the Ministry of Defence. The Ordnance Factories form an integrated base for indigenous production of defence hardware and equipment, with the primary objective of self-reliance in equipping the armed forces with state-of-the-art battlefield equipment. The prime customers of Indian Ordnance Factories are the Indian Armed Forces. Apart from supplying armaments to the Armed Forces, Ordnance Factories also meet the requirement of other customers viz.

Central Paramilitary Forces and State Police Forces in respect of arms, ammunition, clothing, bullet proof vehicles, mine protected vehicles, etc. Increase in volume of export, as an extension to its functioning remains an important objective of the Ordnance Factories.