Why in news?
India’s defence production sector received a boost in 2025 when export orders from the corporatised ordnance factories crossed ₹3,500 crore, the highest ever. This milestone underscores the impact of restructuring the Ordnance Factory Board into a set of corporate entities.
From board to corporations
In October 2021 the Government of India converted the 41 units of the Ordnance Factory Board into seven new Defence Public Sector Undertakings. The goal was to grant these units functional autonomy, modern management practices and greater accountability.
Outcomes of corporatisation
- Financial turnaround: The combined entities moved from a cumulative loss of around ₹2,844 crore in 2019–20 to a profit exceeding ₹625 crore by 2024–25.
- Export surge: Defence exports rose sharply from ₹81 crore in 2019–20 to ₹3,500 crore in 2024–25, showing improved competitiveness and product diversification.
- Performance leaders: Munitions India Limited (MIL) emerged as a top performer, and three of the seven companies — MIL, Armoured Vehicles Nigam Limited (AVNL) and India Optel Limited (IOL) — were granted Miniratna Category‑I status, allowing greater financial autonomy.
Significance
- Self‑reliance: Corporatisation contributes to the Atmanirbhar Bharat initiative by building domestic capability in defence production and reducing reliance on imports.
- Make in India: It supports the broader Make in India programme by attracting investment, upgrading technology and fostering innovation in the defence sector.
- Efficiency gains: Autonomous corporate structures allow professional management, quick decision‑making and better resource allocation.
- Strategic exports: Higher exports enhance India’s stature as a defence supplier and open up new avenues for diplomacy and strategic partnerships.
The corporatisation of the ordnance factories demonstrates that restructuring public sector enterprises can yield tangible benefits when accompanied by autonomy, market orientation and a clear strategic vision.