BAE Systems offers to modernise ordnance factories - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Sunday 9 February 2014

BAE Systems offers to modernise ordnance factories

The Heavy Vehicles Factory, Avadi, which builds the T-90 and Arjun tanks

By Ajai Shukla
Business Standard, 10th Feb 14

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 per cent. 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.”

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 12th 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. 


  1. Dear Mr. Shukla,

    OFBs do need modernisation but before that, they need consolidation and reorganisation. All 41 factories will have to be bifurcated and incorporated according to their specialties, as follows:

    1. Guns and Rifles
    2. Ammunition
    3. Defence Machine Tools
    4. Heavy Vehicles
    5. Defence Clothing/ancillaries

    In addition, their defence technology institutes need to be converted into "National Institute of Defence Technologies" under the UGC. A better manned QA is also due.

    Without all these, its a wastage of time and money.

    MoD should learn lessons from China in this regard.

  2. When Indians don't trust fellow Indians, and rightly so! How can we trust foreigners? Or maybe we trust foreigners more than we trust fellow Indians? Anyway, unless the financial prospects of ordinary Indian citizens don't match those of their western counterparts, its pointless to pretty much do anything in India. Given this challenge, I wonder how many centuries it will take, given the current political dispensation of quotas, reservations and benefits for the countless poor? BAE might have the best of intentions for Indian OFBs, but given the recent hi-tech espionage/hijack cases such as Stuxnet and other crippling industrial malwares, and lax Indian attitudes to such threats, Can we really, really trust our defense to foreigners? Maybe that's why Nehru started the IITs to become centers of excellence in technology in India. Whatever happened to his dream and his successors, Indians still haven't learned much from their history and are bound to repeat it all over again. The Portugese, the French, the British all came to India wishing to establish trade, instead supplied hi-tech weapons to fight amongst ourselves. The lure of easy and assisted victory by these few traders, blind-sided the real threat to the rulers. A person who supplies weapons to others never provides the best from his arsenal, least the recepient turn on him. Thus by using his weapons you have exposed yourselves to his assault. The only way in weapons research is to go 100% indigenous, starting with world class research.

  3. Not a good idea to let foreign involvement in such activities. Too much is exposed to them. Reorganisation skill is a management issue and very much linked to the long term defence policy. Certainly a 'no no' for public exposure.

  4. Until unless our Defence forces will not support indigenization nothing will help these establishments

  5. Despite huge investments, the OFB is inefficient, obsolete and makes substandard products at much higher costs than those manufactured by their foreign competitors. There is corruption at all levels. Exports are very low (even lower than Pakistan). Please privatize all 41 factories under else India will have to pay a heavy price

  6. Till congis are there nothing of those posted in the above comments are going to work. We need a patriot not treacherous traitors who have no love and passion for the country except to loot and plunder the national resources in the name of secularism. If we want to see the change in others it has to begin from our self and not vice versa.

  7. Col Shukla,
    You having served as a Tank commander would know it better.

    1. How come we have developed a severe case of Brochuritis?

    2. Our forces are willing to accept half baked foreign products but reject Indian efforts?
    Case in point is Saga of Arjun Tank. We had some 200 odd reported incident sod barrel bursting but we go and order T90 (Upgraded T72) but baulk at the thought of ordering Arjun.

    3. Right now looking tha the desperate situation IA finds itself in vis-a-vis 155 mm Howitzers, why are they pussyfooting on 155mm (45 Cal) OFB gun.

    I heard from my old buddy that 4th Gun's barrel bursted during trial. He also mentioned that it was after 250 rounds that the barrel heated and bursted. Whats the big deal in that?

    Currently I would welcome any gin which is indigenous, we can upgrade at will and correct on the way rather spend scarce $$$.

    Alos, having a gin that can fire 250-300shots is better than fighting with Insas rifles.

  8. The following is my two-cent.

    1. The rifle produced by OFB was three times costly than the Bulgarian AK-47 which was finally imported.

    2. The price of Destroyers, Frigates purchased from Mazhgaon, Kolkata and Goa Shipyard has been twice, sometimes thrice the price of Russian ones and near equal to French and other Western ones.Reports even say that workers in these shipyards or even other PSUs work minimal during day and only start the actual work after stipulated working hours for getting overtime pay.

    3. Even after DRDO produces world class weapons, the actual production done by OFB is sub-standard, hap-hazard and of uneven quality. Faulty ammunition from OFB was reason for Dhanush prototype's barrel burst, INSAS barrel jamming and crack in its magazine, which all were traced to OFB manufacturing.

    All these point to one thing only. OFB has become a behemoth and has to be rearranged as per its inherent specialty. As the first comment mentions, separate corporations for ammunition manufacture, rifle and artillery manufacture, tank and IFV manufacture and others will help it to focus on its niche area. Thereafter, individual OFB Corps can partner with private industry to produce cutting edge weapons.

  9. I think MOD should choose one OFB as a starter so BAE can showcase its talent and expertise in transforming it. Then having proven, BAE should go on with the other OFBs.

  10. OFB spokesperson is delusional when he talks of how great OFB is in manufacturing...take a look at OFB made small arms for civilians. Horrible in quality of fit and finish and vary all over the place, most fire ok (saving grace) but ammunition sucks.

    They really need to wake up. No wonder Armed forces and even MOD, DRDO et al are frustrated with them.

  11. Onewhoknowsrealindia11 February 2014 at 11:34

    OFBs need to be either shut down or privatized, not modernized at Indian tax payers' money.
    No amount of journalistic genius of Mr.Shukla (an admirable talent without a doubt) can deny the fact that OFBs are absolutely worthless in their current avatar.

  12. This comment has been removed by a blog administrator.


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