Ordnance Factory Board dissolved, split into 7 new corporate entities

The Ordnance Factory Board (OFB) that supplies arms, ammunition and clothing to the Indian armed forces, will be dissolved with effect from October 1, 2021. 

Centre informed that OFB's 41 factories will be split into seven new corporate entities. The Ordnance Factory Board is the main producer of weapons and military equipment in India. 

The Union Cabinet, chaired by Prime Minister Narendra Modi, had cleared splitting of the board into 7 new corporate entities on June 16, 2021. The seven new government-owned corporate entities will produce vehicles, ammunition and explosives, weapons and equipment, opto-electronics gear, troop comfort items, parachutes and ancillary products.

Why is Ordnance Factory Board being dissolved?

The central government had announced that corporatisation of the OFB will improve autonomy, accountability and efficiency in ordnance supplies. The move was undertaken to boost efficiency and competitiveness in the country’s defence manufacturing sector and transform the ordnance factories' assets into more productive and profitable assets. The split of OFB into 7 new corporate entities is expected to deepen product specialisation, improve quality and boost performance, accountability and cost-efficiency.

Seven new entities include:

1. Ammunition and Explosives group  (Munition India Limited)

2. Vehicles Group (Armoured Vehicles Nigam Limited)

3. Weapons and Equipment group (Advanced Weapons and Equipment India Limited)
 
4. Troop Comfort Items group (Troop Comforts Limited)

5. Ancillary group (Yantra India Limited) 

6. Opto-Electronics group (India Optel Limited)

7. Parachute group (Gliders India Limited)

What will happen to the existing assets, employees of OFB?

All of OFB's assets and employees (Group A, B & C) will be transferred into the 7 new entities. This will ensure the protection of jobs of the existing central government employees. 

The employees will 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 will also continue to be borne by the centre. Each of the new seven entities will be required to frame rules and regulations related to service conditions of the absorbed employees.