Central government dissolves Ordnance Factory Board; assets and employees transferred to seven government-owned Defence PSUs

Published : September 29, 2021 12:19 IST

Rocket launchers being manufactured at the OFB plant in Medak, Telangana. a file photograph. Photo: The Hindu Archives

The Ministry of Defence has quietly issued an order dissolving the giant Ordnance Factory Board (OFB) with effect from October 1 even as the recognised unions of defence civilian employees are protesting an advertisement put out by the Department of Defence Production saying that Prime Minister Narendra Modi will be dedicating to the nation the seven new defence entities that have been spun out of the 41 ordnance factories. The OFB, a Defence Ministry entity, has been supplying critical arms and ammunition to the three armed forces and the paramilitary.

In an order dated September 28, the Ministry of Defence stated: “Government of India has decided to transfer, with effect from October 1, 2021, the management, control, operations and maintenance of these 41 production units and identified non-production units to seven government companies (wholly owned by the government of India).” The names of the seven Defence public sector units (DPSUs) as announced by the Ministry of Defence are: Munitions India Limited, Armoured Vehicles Nigam Limited, Advanced Weapons and Equipment India Limited, Troop Comforts Limited, Yantra India Limited, India Optel Limited and Gliders India Limited.

The Defence Ministry’s order further said: “The government has decided that all the employees of OFB (Group A, B & C) belonging to the production units and also the identified non-production units… shall be transferred en masse to the new DPSUs on terms of foreign service without any deputation allowance (deemed deputation) initially for a period of two years from the appointed date (October 1).”

Each of the new DPSUs will be required to frame rules and regulations relating to the service conditions of the absorbed employees and should also 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. It also stated that the service conditions of the absorbed employees will not be inferior to their existing ones and that a committee will be constituted by the Department of Defence Production for guiding the new DPSUs in this regard “so that the absorption package given is attractive”.

The gargantuan, over 220-year-old ordnance factories organisation consisting of 41ordnance factories will now have their assets, employees and management transferred to the seven new, 100 per cent government-owned corporate entities. The Defence Ministry’s decision is in tune with the June 16 Union Cabinet decision to split the OFB in a bid to corporatise the entity.

The Modi government has defended its decision to splinter the OFB organisation, which has an annual turnover of around Rs.19,000 crore and around 76,000 employees, saying that the corporatisation of the OFB “would improve autonomy, accountability and efficiency in ordnance supplies”. The government had first announced its intention to split the OFB in May of last year.

The unions, including the All India Defence Employees’ Federation and the Bharatiya Pratiraksha Mazdoor Sangh, which represent 76,000 civilian defence employees working in the 41 Ordnance Factories and the Ordnance Factory Board’s headquarters, have called on members to observe a “Black Day” on October 1.