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Poor quality ammo, mines supplied by state-owned factory have cost India Rs 960 crore

DEFENCE-ENG-30-09-2020-India (1)

The Indian exchequer has incurred losses to the tune of Rs 960 crore because of “poor quality” ammunition and mines supplied by the state-owned Ordnance Factory Board (OFB) in the last five to six years, the Army has noted in an internal assessment. 

The use of OFB-manufactured equipment has also resulted in over 400 accidents between 2014 and 2019 that led to 27 deaths, the Army said.

According to the assessment, it had disposed of ammunition worth Rs 658.58 crore within their shelf life between April 2014 and April 2019. Mines worth another Rs 303.23 crore met the same fate in 2016 after an accidental mine explosion in 2016 at a depot in Pulgaon, Maharashtra. 

The money lost, the Army noted in the assessment, could have been used to buy 100 units of the 155 mm Medium Artillery gun.

The OFB, which functions under the Ministry of Defence’s Department of Defence Production, is one of the oldest state-owned production entities. 

The OFB has 41 factories, which are divided into five operating divisions based on the category of products they offer: Ammunition and Explosives factories, Vehicles and Weapons, Material and Components, Armoured Vehicles, and Equipment Factories.  

The Army has said in its assessment that the sub-optimal efficiency of the OFB is among the major factors that threaten the ammunition and armament holdings of the force. Pointing out these shortcomings, the Army has thrown its weight behind government plans to corporatise the OFB to make it more efficient.

‘Refused by other countries’

In its assessment, the Army has said that certain countries refuse to accept ammunition and other equipment manufactured by India’s ordnance factories, when they are offered against defence lines of credit. The material is rejected, the Army noted, on account of concerns regarding the “quality of output, procedures in the factories and inefficient post-sale service”.

The lack of accountability and poor quality of production by OFB facilities led to 403 accidents between 2014 and 2019, affecting air defence, armoured corps, infantry and artillery arms of the Army, for which the OFB manufactures ammunition. These accidents resulted in 27 fatalities, the Army added. 

The assessment also highlighted the high cost of items produced by the OFB. Among other things, it has cited CAG reports to argue that the OFBs have missed annual production targets by 51-67 per cent between 2013-14 and 2017-18.

The Army has emphasised the need for urgent corporatisation of OFB, stating that it will improve its efficiency, lead to competitive pricing of products, and improve its flexibility in technology acquisition. Earlier this month, the defence ministry selected a consortium led by KPMG Advisory Services Pvt Ltd to offer consultancies services on the corporatisation of the OFB.