Govt transfers assets to 7 defence public sector units

The move to corporatise the ordnance factories has been opposed by three workers’ unions

NEW DELHI: The Union government has ordered the dissolution of the four-decade-old Ordnance Factory Board (OFB) and amalgamated 41 factories under seven new state-owned companies to manufacture defence hardware ranging from munitions to heavy weapons and vehicles. The move, first unveiled as part of the “Atmanirbhar Bharat” (self-reliant India) package in June, is aimed at enhancing efficiency, autonomy and accountability, and introducing a corporate structure for the network of ordnance factories against a backdrop of calls for reforms in the state-run defence industry.

According to an official order issued by the department of defence production under the defence ministry on September 24, OFB will be dissolved from October 1 and the assets, employees and operations of the 41 factories will be transferred to the seven defence public sector units (DPSUS).

Twelve factories making a wide range of munitions will be brought under Pune-based Munitions India Limited, which will manufacture ammunition and explosives, while five factories making heavy vehicles will be amalgamated under the Avadi-based Armoured Vehicles Nigam Limited.

Eight factories that make weapons ranging from small arms to rifles and field guns will be brought under the Kanpur-based Advanced Weapons and Equipment India Limited, which will manufacture weapons and equipment. Four factories will be part of Troop Comforts Limited, which will oversee the manufacture of clothing and other items. Nagpur-based Yantra India Limited will oversee the functioning of eight factories that will manufacture military grade components and ancillary products, while Dehradun-based India Optel Limited

will bring together three factories that will make optoelectronic items. The Kanpurbased Ordnance Parachute Factory will be brought under Gliders India Limited, which will be engaged in manufacturing parachutes. Ten non-production units, such as the National Academy of Defence Production and several institutes of learning, will be merged with the seven new companies, while 11 more nonproduction units, including regional marketing centres, will be handed over to the companies and their employees transferred to different factories, according to the order. 3,152.11 acres of surplus land at 16 ordnance factories will be transferred to the directorate of ordnance (coordination and services).

The seven new companies are “required to frame rules and regulations related to service conditions of the absorbed employees and seek an option for permanent absorption from the employees on deemed deputation to that respective

DPSU, within a period of two years”, the order stated.

In June, after the Union cabinet cleared the corporatisation of the OFB, Singh described the decision as a “historic one.” “It is also a big decision from the point of view of national security,” Singh had said. The move has been opposed by three workers’ unions, which have said the units employ a total of around 80,000 people. The unions, in November 2020, also presented a proposal for restructuring the factories and improving their functioning to achieve production targets.

The Kolkata-based OFB was established in April 1979, but the history of some ordnance factories dates back hundreds of years. Some of the oldest factories located in West Bengal were set up in the 18th century. In recent decades, there have been growing demands from the armed forces and experts for reforms in the units to bring in new technologies and production methods and to ensure the production of sophisticated weaponry. The government’s order marks the first major overhaul of the factories in decades and the introduction of a corporate structure will enable the companies to raise capital by going public if the government decides to do so.

THE KOLKATA-BASED OFB WAS ESTABLISHED IN APRIL 1979, BUT THE HISTORY OF SOME ORDNANCE FACTORIES DATES BACK HUNDREDS OF YEARS