New Delhi: The cabinet cleared the corporatization of the Ordnance Factory Board into 7 companies paving the way for making them more cost efficient, productive and profitable besides increasing competitiveness, sources said.

The decision to corporatize the Ordnance Factory Board – which controls the 41 ordnance factories — was announced last year by Finance Minister Nirmala Sitharaman as part of a package to make India self-reliant in defence hardware production. The board will now be split into seven entities owned by the government that will produce ammunition and explosives, vehicles, weapons and equipment, troop comfort items, opto-electronics gear, parachutes and ancillary products, the sources said.

“This move would provide these companies with autonomy as well as help improve accountability and efficiency,” the sources said. An empowered group of ministers (EGoM), constituted under the defence minister Rajnath Singh last year, will oversee the board’s corporatisation and also take decisions on related matters.

Ordnance factories currently manufacture tanks, armoured personnel carriers, mine protected vehicles, bombs, rockets, artillery guns, anti-aircraft guns, parachutes, small arms, clothing and leather equipment for soldiers. However, there have been complaints from the defence forces that the quality of products manufactured by the OFB were substandard.

News reports had last year said that the Indian army in an internal assessment had flagged concerns about faulty ammunition and armaments supplied by the OFB causing casualties and causing wastage of public finances. The news reports had said that some 403 accidents over the previous six years resulted in the deaths of 27 soldiers and a loss of Rs. 960 crores to the exchequer.

The Comptroller and Auditor General had repeatedly raised questions about the quality of products supplied by the OFB and its overall performance in its reports