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Monday, October 18, 2021

After 40 yrs, curtains close on OFB; orders worth Rs 65,000 cr turned into contracts

Most of the orders (known as indents) pending with the OFB —worth around Rs 65,000 crore—have been renegotiated into contracts between the government and the new corporate entities, said Defence Ministry sources.

Written by Krishn Kaushik | New Delhi |
Updated: October 2, 2021 11:39:31 am
The Ordnance Factory Board is headquartered in Kolkata. (Express Archive)

Four decades after its creation, the Ordnance Factory Board (OFB) ceased to exist on Friday. Its 41 ordnance factories—the first of which is more than 300 years old—became part of the seven new defence public sector undertakings (DPSUs) created by the government.

Most of the orders (known as indents) pending with the OFB —worth around Rs 65,000 crore—have been renegotiated into contracts between the government and the new corporate entities, said Defence Ministry sources. These entities are now bound to the deliverables and timelines in the contracts.

The contracts are for specialised clothing, ammunition, armoured vehicles, explosives, and other military equipment.

Explained

Division of work among DPSUs

The DPSUs have been divided so that each specialises in a certain kind of equipment. Munitions India Ltd will cater to ammunition and explosive needs. Armoured Vehicles Nigam Ltd will produce mobility and combat vehicles, such as tanks. Similarly, the other new DPSUs are Advanced Weapons and Equipment India Ltd, Troop Comforts Ltd, Yantra India Ltd, India Optel Ltd and Gliders India Ltd.

The armed forces had often raised concerns about the delay in production by the various ordnance factories under the OFB. The quality of OFB-produced equipment has also raised alarm from time to time. The government is hoping that with the new structure, there will be an improvement on both counts.

Sources said the work on renegotiation of these contracts had begun soon after the Cabinet had given the final nod for corporatisation of OFB on June 16. The idea was to have the contracts ready when the DPSUs become operational, which they did on Friday.

Work and negotiation on some contracts are still ongoing, but are expected to be completed soon, said sources.

Sources said the government has allotted more than Rs 1,000 crore for the new DPSUs to meet their operational needs in the immediate term. It intends to create a Rs 2,500-crore corpus for them.

The idea behind the creation of these DPSUs, owned 100 per cent by the government is to give them autonomy as well as help improve accountability and efficiency.

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