British defence and aerospace giant, BAE Systems, has offered assistance in modernising the countrywide network of 41 factories in which the Ordnance Factory Board (OFB) manufactures weaponry, ammunition and equipment for the defence forces. The OFB is owned by the ministry of defence (MoD).
In 2011-12, OFB factories produced Rs 12,391 crore worth of equipment for the military, with an import content of just 9.82%. Yet, with the oldest of them dating back to 1801, and 8 factories over a hundred years old, an opportunity has been sensed by BAE Systems, which has spearheaded the modernisation and transformation of the UK’s Royal Ordnance Factories since 1987.
Speaking to Business Standard, Mark Simpkins, the general manager of BAE Systems India, revealed: "This week we offered to partner the Indian Ordnance Factory Board in modernization their production factories. We made this offer directly to the ministry of defence, and also through the UK government. During DefExpo, we made this offer again. We await a response.”
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Simpkins points to the OFB’s British origins, and to BAE Systems’ successful experience in modernising similar factories in the UK. He claims: “Today, we are probably are the only people in the world who know exactly how to build a world class ordnance factory, by modernising older production units.”
Although OFB has invested steadily in modernisation and expansion, and has increased output from Rs 6,938 crore in 2007-08, to Rs 12,391 crore in 2011-12, it is hard pressed to meet growing Indian demands for defence equipment. Besides the military, the OFB must also supply central armed police forces like the CRPF and the BSF.
With OFB capacity insufficient for meeting domestic demand, arms exports languish. Senior government officials say this is a key reason for New Delhi being unable to supply arms for the Afghan National Security Forces, even though this was requested personally by Afghan president, Hamid Karzai.
The latest report of Parliament’s Standing Committee on Defence notes, “At present there is a need to augment the existing capacities of Ordnance Factories to meet the requirement of the Armed Forces and Para Military Forces. This has resulted in a very little scope available with OFB to meet the export demand.”
Senior OFB officials confirm the BAE Systems offer, but say they would evaluate how that might synergise with the OFB’s own detailed modernisation plans.
Sartaj Singh, the OFB Chairman, told Business Standard that the OFB would not hesitate to join hands with a foreign partner if there is a clear technological advantage.
“But we are already one of the largest and most advanced builders of weaponry in the world”, says Singh, pointing out that the OFB builds more high calibre weaponry than any other organisation. “We build 450 high calibre systems each year and are already upgrading that capacity to 700 systems.”
The OFB chairman claims the technology that goes into these systems --- such as electro-slag refined steel, radial forging and auto-frettaging of barrels --- is as good as any arms manufacturer in the world.
Bharat Singh, the OFB’s Deputy DG for Weapons, is equally cautious. He says: “We will evaluate the BAE Systems offer carefully to see if there is anything beyond the upgrades that we are already doing, such as those for automating the manufacture of ammunition, and addition of capacities.”
According to figures provided by the MoD to the Standing Committee on Defence, the OFB will spend Rs 15,764 crore on modernization during the 12 th Plan (2012-17). During the 11th Plan (2007-2012) the OFB spent Rs 2,953 crore on modernization and capacity augmentation.
Over the last three years, the MoD has approved capacity augmentation projects for the OFB worth Rs 4,144 crore, for completion by 2015-16. New projects worth Rs 2,756 crore are currently being executed, while another Rs 2,400 crore worth of modernisation is being examined by the Department of Defence Production (DoDP).
The defence budget for 2012-13 allocated Rs 906 crore to OFB modernisation, and the allocation for this year is Rs 1,029 crore.