From UPSC perspective, the following things are important :
Prelims level : Ordinance Factory
Mains level : Strategic disinvestment
The Defence Ministry has issued an order for the dissolution of the Ordnance Factory Board (OFB) with effect from October 1.
Ordnance Factory Board (OFB)
- OFB consisting of the Indian Ordnance Factories is a government agency under the control of the department of defence production (DDP).
- 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, nine training institutes, three regional marketing centres and four regional controllers of safety, which are spread all across the country.
Take a look at this timeline
1712 – Establishment of the Dutch Ostend Company’s Gun Powder Factory at Ichhapur
1775 – Establishment of the Board of Ordnance at Fort William, Kolkata.
1787 – Establishment of the Gun Powder Factory at Ishapore.
1935 – Indian Ordnance Service was introduced to administer the whole Defence Production Industry of India.
1954 – Indian Ordnance Service (IOS) renamed to Indian Ordnance Factories Service (IOFS).
1979 – Ordnance Factory Board is established on 2 April.
Why are OFBs significant?
- OFB is the world’s largest government-operated production organization and the oldest organization in India.
- 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.
- It is a major decision in terms of national security and also make the country self-sufficient in defence manufacturing as repeatedly emphasized by PM.
- This move would allow these companies autonomy and help improve accountability and efficiency.
- This restructuring is aimed at transforming the ordnance factories into productive and profitable assets, deepening specialization in the product range, enhancing competitiveness, improving quality and achieving cost efficiency.
What about employees?
- 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.
- The pension liabilities of the retirees and existing employees would continue to be borne by the government.
Significance of the move
- With OFB dissolution, its assets, employees and management would be transferred to seven newly constituted defence public sector undertakings (DPSUs).
- This would mean the end of the OFB, the establishment of which was accepted by the British in 1775.