The Ordnance Factory Board (OFB) will be dissolved with effect on Friday in line with a decision taken by the Union cabinet earlier this year. The board’s assets, employees, and management are being divided into seven newly established defence public sector undertakings (DPSUs), according to an official order issued by the defence ministry. Although the nearly 70,000 employees of the Ordnance Factory Board are being transferred to these new PSUs, there will be no change in their service conditions, defence minister Rajnath Singh clarified. The names of these seven new defence PSUs are – Munition India Ltd, Armoured Vehicles Nigam Ltd, Advanced Weapons and Equipment India Ltd, Troop Comforts Ltd, Yantra India Ltd, India Optel Ltd and Gliders India Ltd.

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There had been a long-pending proposal to restructure the over 200-year-old defence ministry entity – the Ordnance Factory Board –  which, with its 41 ammunition and military equipment production facilities, supplied critical arms and ammunition to the three armed forces and the paramilitary. The proposal aimed to transfer the existing framework into seven state-owned corporate entities to improve the board’s accountability, efficiency and competitiveness. Finally, the Union cabinet decided to take the issue up on June 16 and approved the major reform initiative.

In an order issued later on September 24, the defence ministry said, “Government of India has decided to transfer, with effect from October 1, the management, control, operations and maintenance of these 41 production units and identified non-production units to seven government companies.”

Service conditions of employees

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.

It said each of the new DPSUs is required to frame rules and regulations related to service conditions of the absorbed employees and seek an option for permanent absorption from the employees on deemed deputation to the respective DPSUs within a period of two years.

“The service conditions of the absorbed employees would not be inferior to the existing ones,” the order said, adding a committee would be constituted by the Department of Defence Production (DDP) for guiding the new DPSUs that the absorption package given is attractive.

It said the pension liabilities of the retirees and existing employees will continue to be borne by the government from the defence ministry’s budget. “For the employees recruited after January 1, 2004, the National Pension Scheme applicable to the Central Government employees is in vogue and the same may be adopted by the new DPSUs, including the continuation of all special provisions applicable to Central government employees under the National Pension System,” it said.