Following the announcement that the Ordnance Factory Board (OFB) will be dissolved and replaced by seven new defense public sector undertakings;

Mathew George, Ph.D, Aerospace, Defense and Security Analyst at GlobalData, a leading data and analytics company, offers his view:

“The move was earlier resisted by the workers, who have been now pacified by announcements that the benefits and pensions for those already employed at the OFBs will continue. This is a short-gap measure to ensure that production and development is not affected in the over 200-year-old board that has 41 factories across India. As of now, the seven entities will focus on specific areas of development and convert the old, single large body into modern, efficient and specialized entities.

“It is going to be a mammoth task ahead for the companies to function as independent, economical bodies and to restructure themselves to achieve efficiencies. Going ahead, with efficient production, increased specialization and a need to function as independent companies, the cost to government is expected to come down once the present liabilities are completed.

“On the other hand, there will be demand for quality products from India’s security forces, which may benefit from shorter lead times and cost efficiencies. But the larger question will be whether the restructured entities will have the ability to compete globally and win those all-important export orders that will determine whether this costly restructuring will be beneficial in the long-run or not.”