Dismantling of the Ordnance Factory Board (OFB)

Dismantling of the Ordnance Factory Board (OFB)- Relevance for UPSC Exam

• GS Paper 3: Indian Economy- Changes in industrial policy and their effects on industrial growth.

Dismantling of the Ordnance Factory Board (OFB)- Context

• Recently, the Defence Ministry has issued an order for the dissolution of the Ordnance Factory Board (OFB).
• After dissolution, its assets, employees and management would be transferred to seven newly constituted Defence Public Sector Undertakings (DPSUs).

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Dismantling of the Ordnance Factory Board (OFB)- Key Points

• Background: Ordnance Factory Board (OFB) was established in 1875 after it was accepted by the British in 1775.
• About: OFB was an umbrella body of the ordnance factories and related institutions.
  • Parent Ministry: functioned as a subordinate office of the Ministry of Defence (MoD).
• Dismantling of OFB: On June 16, the Union Cabinet had approved a long-awaited reform plan to corporatise the OFB.
  • It approved the conversion of 41 OFB factories, into seven fully government-owned corporate entities on the lines of DPSUs.
• Objectives of Restructuring: Key objectives are of OFB dismantling-
  • Transforming the Ordnance Factories into productive and profitable assets,
  • Deepen specialisation in the product range,
  • Enhance competitiveness, improving quality and cost-efficiency.

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Dismantling of the Ordnance Factory Board (OFB)- Associated Impact

• Transfer of the management, control, operations and maintenance of the 41 production units and identified non-production units to seven government companies. Seven companies are-

1. 1. Munitions India Limited,
   2. Armoured Vehicles Nigam Limited,
   3. Advanced Weapons and Equipment India Limited,
   4. Troop Comforts Limited,
   5. Yantra India Limited,
   6. India Optel Limited, and
   7. Gliders India Limited.

• Transfer the management, control, operations and maintenance of certain identified non-production units of OFB and identified surplus land at 16 production units of OFB to the Directorate of Ordnance (Coordination & Services) under the DDP.
• Impact of employees: all the employees of OFB belonging to the production units and also the identified non-production units will be transferred en masse to the new DPSUs.
• Key Obligations of newly created DPSUs:
  • They are required to frame rules and regulations related to the service conditions of the absorbed employees.
  • Seek an option for permanent absorption from the employees on deemed deputation to that respective DPSU, within a period of two years.
  • A committee would be constituted by the DDP for guiding the new DPSUs in this regard so that the absorption package given is attractive.

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