The long pending plan, which was mooted almost two decades ago, was cleared by the Union Cabinet on Wednesday and will lead to greater accountability and efficiency of the 41 factories that operate under the OFB banner.
“This is a historic step…we have ensured that there will be no change in the service conditions of the employees. It will help improve accountability and efficiency,” Defence Minister Rajnath Singh, who led an empowered Group of Ministers to oversee the corporatisation, said. The government had fast paced plans to change the structure of OFB last year, with the military too flagging the need for a reliable supplier of ammunition to maintain operational preparedness. Among the several issues raised by the military on the current functioning of the OFB was a concern over its inability to absorb technology developed by the Defence Research and Development Organisation.
Under the reforms step, seven new government-owned corporate entities will be created on the lines of the existing Defence Public Sector Units (DPSUs) like
(HAL) and (BEL) with professional management. The entities will be engaged in specialised work like ammunition and explosives, vehicles, weapons, troop comfort, opto-electronics and parachutes.
“The restructuring is aimed at transforming the factories into productive and profitable assets, deepen specialisation in the product range, enhance competitiveness and improve quality and cost efficiency,” officials said.
All matters related to the implementation of the restructuring have been entrusted to the empowered group of ministers led by Rajnath Singh, that will work in the coming months to ensure a smooth transition. The restructuring is expected to be rolled out this year.
Ever since the government has started work on the corporatisation, it has met with resistance from workers’ unions that have opposed the move. Officials said that all concerns have been taken into consideration while approving the new structure and existing employees will be transferred to the corporate entities without any alteration in their service conditions as central government employees. The corporatisation is being welcomed by the private industry as well, which has complained in the past about a lack of opportunities to compete for military contracts.