Seven new defence CPSEs created

By: |
October 16, 2021 9:10 AM

PM says the new companies, carved out of OFB, will have strong R&D focus

The assets of the over 200-year-old Ordnance Factory Board (OFB), including its 41 ordnance factories have been transferred to the seven new firms while OFB will cease to exist.The assets of the over 200-year-old Ordnance Factory Board (OFB), including its 41 ordnance factories have been transferred to the seven new firms while OFB will cease to exist.

While central public sector enterprises (CPSEs) in non-strategic sectors are progressively being privatised or wound up and even many public sector banks (PSBs) are also going to be in private hands, new state-owned firms are being born in the defence sector. Prime minister Narendra Modi on Fiday announced creation of seven state-run defence companies that will enjoy full functional autonomy and have decisive R&D orientation.

The assets of the over 200-year-old Ordnance Factory Board (OFB), including its 41 ordnance factories have been transferred to the seven new firms while OFB will cease to exist.

“There is more transparency, trust and technology-driven approach in India’s defence sector now than ever before and major reforms are taking place for the first time since Independence while discarding stagnant policies,” Modi said. The goal is to make the country the world’s biggest military power on its own, he reiterated.

The new move is in sync with a series of announcements made over the last few years to promote private investments and indigenisation of India’s defence production. By July end this year, 333 private companies were issued as many as 539 industrial licences for defence manufacturing, of which 110 companies commenced production.

The Centre had also enhanced FDI in defence sector up to 74% through the automatic route for companies seeking new defence industrial licence and up to 100% via ‘approval route’ “wherever it was likely to result in access to modern technology or for other reasons to be recorded”. Also, defence capital outlay was increased by 18.75 % in the Budget of 2021-22.

The new defence CPSEs are Munitions India (MIL), Armoured Vehicles Nigam (AVANI), Advanced Weapons and Equipment India (AWE India), Troop Comforts (TCL), Yantra India (YIL), India Optel (IOL) and Gliders India (GIL). With these, the country will now have 16 defence CPSEs.

Modi said these companies would not only establish expertise in their products but also become global brands. He urged that while competitive cost is India’s strength, quality and reliability should be its identity.

The prime minister hoped that the new companies would play an important role in import substitution. An order book of more than `65,000 crore reflects the increasing confidence of the country in these companies, he added.

“After Independence, we needed to upgrade these factories, adopt new-age technology. But it was not given much attention. Over time, India became dependent on foreign countries for its strategic needs. These new seven defence companies will play a big role in bringing change in this situation,” he said in his video address.

“I also make a special request to all the seven companies that research and innovation should be a part of your work culture….You not only have to match the world’s biggest companies, but also take the lead in future technology,” he added. “I will also tell the start-ups of the country, through these seven companies, the new beginning that the country has started today, you should also be a part of it,” he said.

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