Ordnance factory board

News: The 220-year-old Ordnance Factory Board will be dissolved on October 1, and its units will be corporatised under seven PSUs.

What is ordnance factory board?

Ordnance Factory Board (OFB), consisting of the Indian Ordnance Factories, was an organisation, under the control of department of defence production. Government decided to dissolve the OFB and its corporatization.

Why corporatization?

• It has been argued that OFB’s monopoly has led to innovation drying up, apart from low productivity, high costs of production, and lack of flexibility at the higher managerial levels.
• Functioning directly under the Ministry of Defence, the OFB and its factories could not retain profits.
• The government has claimed that the move is aimed at improving the efficiency and accountability of these factories.

What is the new plan?

• Ordnance factory board will be dissolved.
• 41 factories, ammunition and other equipment to the armed forces will become part of seven government owned corporate entities.
• The Bill empowers the government to declare services mentioned in it as essential defence services.
• It also prohibits strike and lockouts in “any industrial establishment or unit engaged in essential defence services”.