With the recent cabinet approval for the corporatization of the Ordnance Factory Board (OFB), the defense sector in India is moving forward in the right direction with much-needed reforms, which should have been initiated decades before. But, better late than never.
At a time when India is facing threats on the borders, and from the use of unaccustomed civilian technologies such as drones, it is vital for the Indian defense sector to fully equip its forces with modern equipment and technology. India should be aware that its adversaries are constantly upgrading their military arsenal with advanced technologies such as the modern hunter-killer tanks, which are posing a big threat to India.
The corporatization of OFB, if properly implemented and monitored, will help in inducting the state of art facilities and technology in the ordnance factories. Along with giving more decision-making capacity and flexibility to the factories’ management, corporatization will also make them more productive and capable of earning profits by slashing the inefficient use of funds on expenditures such as overheads.
It was astounding to know that overheads constituted 33% of the overall allotted budget on OFB for the year 2017-2018 according to the Comptroller and Auditor General’s Report of 2019. Adding to the shock is the fact that ordnance factories were able only to execute less than half of the orders in time.