The move is aimed to bring enhanced functional autonomy, efficiency and to unleash new growth potential and innovation

Prime Minister Narendra Modi will dedicate the seven new defence companies that have been formed out of the Ordnance Factory Board to the nation on Friday.

The government has decided to convert the Ordnance Factory Board from a government department into seven 100 per cent government-owned corporate entities as a measure to improve self-reliance in the defence preparedness of the country.

The move is aimed to bring enhanced functional autonomy, efficiency and to unleash new growth potential and innovation.

The seven new defence companies are: Munitions India Limited (MIL); Armoured Vehicles Nigam Limited (AVANI); Advanced Weapons and Equipment India Limited (AWE India); Troop Comforts Limited (TCL); Yantra India Limited (YIL); India Optel Limited (IOL); and Gliders India Limited (GIL).

In 2019, the government had decided to corporatize the Ordnance Factory Board (OFB). Consequent to the decision of the government to convert the OFB, the government had constituted an Empowered Group of Ministers (EGoM) under the chairmanship of Defence Minister Rajnath Singh to oversee and guide the entire process, including transition support and redeployment plan of employees while safeguarding their wages and retirement benefits.

Earlier, the OFB controlled 41 factories, employing over 70,000 people. It had an annual turnover of about Rs 19,000 crore. All of this is now distributed into seven defence public sector units (DPSUs).

The employees belonging to Groups A, B and C of the dissolved OFB from both production and non-production units have been transferred to the new DPSUs.

Four committees were set up since 2000 to suggest reforms in the defence sector, and except the one formed by former Defence Minister Manohar Parrikar, the other three -- TKS Nair Committee (2000), Vijay Kelkar Committee (2005), and Vice Admiral Raman Puri Committee (2015) -- had favoured corporatisation of OFB.