With a notification issued on 1 October 2021, the Union government had announced the decision to dissolve the erstwhile OFB and constitute seven new DPSUs which would take over the operations of the 41 ordnance factories in the country and their allied facilities. Munitions India Limited (MIL), which is the largest among the seven DPSUs, took over the operations of the 12 factories involved in development, production, testing and marketing of ammunition and explosives for the armed forces and civilian entities.

In end-September, Defence Minister Rajnath Singh reviewed the working of the seven DPSUs carved out of the OFB at a meeting organised in New Delhi to mark the completion of one year of their operations. The Defence Minister was briefed by the officials of Department of Defence Production on the progress made by these new DPSUs in the last one year and he also addressed the officers and employees of the seven companies virtually.

Listing various achievements of these DPSUs over the first one year of their operations, MoD said in a press statement that MIL has obtained export orders worth more than Rs 1,500 crore for various types of ammunition in the last one year. Officials said among these orders, one single order was of Rs 500 crore, one of the largest ever export order of ammunition by any Indian entity. Without naming particular countries, the MIL has said, “Our foreign customers include countries located in North America, South America, Europe, Africa and Asia. The patronage we receive from our customers both in India and abroad reflects their faith in the quality of our products and services.”

The MIL group of ordnance factories includes Ammunition Factory Khadki, Cordite Factory Aruvankadu, High Energy Projectile Factory Tiruchirapalli, High Explosive Factory Khadki, Ordnance Factory Bhandara, Ordnance Factory Bolangir, Ordnance Factory Chanda Chandrapur, Ordnance Factory Dehu Road, Ordnance Factory Itarsi, Ordnance Factory Khamaria, Ordnance Factory Nalanda and Ordnance Factory Varangaon.

The 12 factories under the MIL are involved in production of small, medium and high calibre ammunition, mortars, rockets, hand grenades and also manufacturing of onitiatory explosives, propellants and explosives. The MoD said that MIL has also achieved a milestone as it successfully proof-fired new variants of Pinaka Rocket which is Pinaka Mk-I Extended Range and Dual Purpose Improvised Conventional Munitions (DPICM), which are specially designed warheads. MIL has also successfully developed 40 mm Under Barrel Grenade Launcher (UBGL) ammunition, 500 kilogram General Purpose Bomb and various Super Rapid Gun Mount SRGM and High Explosive Dual Purpose Ammunition.

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In an order dated September 28, the defence ministry said: 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).

According to the order, the name of the seven defence PSUs (also called DPSUs) are:

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.
7. Gliders India Limited.
   The OFB is currently a defence ministry entity and supplies critical arms and ammunition to the three armed forces and the paramilitary.
   As part of the “Atmanirbhar Bharat” (self-reliant India) package, the central government had announced, on 16 May 2020, that it would improve autonomy, accountability and efficiency in ordnance supplies by corporatisation of the OFB.

Prime Minister’s Message

In a video address, on 1 October, to dedicate seven new defence companies to the nation, Prime Minister Narendra Modi, referring to the self-reliant India campaign, said the goal is to make the country the world’s biggest military power on its own.
He mentioned that the target should be that the companies not only establish expertise in their products but also become global brands. He urged that while competitive cost is India’s strength, quality and reliability should be its identity.

He said the world saw the strength of India’s ordnance factories at the time of World War I and that they used to have better resources and world-class skills, but the companies were ignored in the post-Independence period, leading to the country’s dependence on foreign supplies.

“After Independence, we needed to upgrade these factories, adopt new-age technology. But it was not given much attention. Over time, India became dependent on foreign countries for its strategic needs. These new seven defence companies will play a big role in bringing change in this situation,” he said in his video address.

“Today, there is more transparency, trust, and technology-driven approach in the defence sector of the country than ever before. For the first time after Independence, so many major reforms are happening in our defence sector and instead of stagnant policies, a single-window system has been arranged,” he said.

“These seven defence companies will play a major role in changing this situation,” he said.

The prime minister hoped that the new companies would play an important role in import substitution. An order book of more than Rs 65,000 crore reflects the increasing confidence of the country in these companies, he added.

Noting that the decision on reform of the OFB was pending for the last 15-20 years, Modi said works stuck for decades are being completed and India is taking new resolutions to build a new future. “In the 21st century, whether a country or a company, its growth and brand value is determined by its research and innovation. From software to the space sector, India’s growth, India’s new identity is the biggest example of this,” he said.

“Therefore, I also make a special request to all the seven companies that research and innovation should be a part of your work culture….You not only have to match the world’s biggest companies, but also take the lead in future technology,” he added.

Modi said the government has given full functional autonomy along with giving a better production environment to all the companies, adding it has also been ensured that the interests of the workers of these factories are fully protected.

Service Conditions

Defence Minister Rajnath Singh and representatives from the defence industry associations were present on the occasion. Singh has already clarified that there will be no change in service conditions of nearly 70,000 employees of the erstwhile organisation and the decision to corporatise the OFB is driven by efforts to boost India’s defence manufacturing sector.
Each of the new DPSUs is required to frame rules and regulations related to service conditions of the absorbed employees, the order noted.

Each of the DPSUs should also seek an option for permanent absorption from the employees on deemed deputation to that respective DPSU, within a period of two years, it stated.

The service conditions of the absorbed employees would not be inferior to the existing ones. A committee would be constituted by DDP (Department of Defence Production) for guiding the new DPSUs in this regard so that the absorption package given is attractive, the order mentioned.

All the employees of OFB (Groups A, B, and C), belonging to the production units and also the identified non-production units, are to be transferred en masse to the new DPSUs on terms of foreign service. They will, however, not be provided with any deputation allowance (deemed deputation) initially for a period of two years from the appointed date, an official order stated.
The MoD has set a target of achieving a turnover of Rs 1,75,000 crore in aerospace and defence goods and services by 2024. This includes exports worth Rs 35,000 crore. The new companies will take over the existing OFB orders to the tune of Rs 65,000 crore.

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