Defence / Indigenous Manufacturing — UPSC Mains Model Answer

The OFB, which functioned as a subordinate office under the Ministry of Defence, was dissolved in October 2021. Its 41 ordnance factories were absorbed into seven newly created DPSUs, each specialising in product categories such as ammunition, vehicles, armoured vehicles, and electronics. Crucially, this was corporatisation, not privatisation — the entities remain government-owned.

The departmental model insulated factories from market discipline, resulting in cost overruns, quality complaints, and dependence on captive defence orders. Corporate structures introduce board-level accountability, independent audits, and the flexibility to pursue commercial and export orders, aligning with the broader Aatmanirbhar Bharat defence initiative.

The reorganisation supports India's ambition to become a significant defence exporter. DPSUs can now enter joint ventures, attract technology partnerships, and bid for global contracts — avenues that were structurally unavailable to a government department.

Transition risks include workforce resistance, legacy pension liabilities, and the challenge of building commercial competencies in organisations with a long production-order culture. Ensuring quality standardisation across newly independent entities also requires robust regulatory oversight by the Ministry of Defence.