According to data given by the Ministry of Defence, the Ordnance Factory Board’s (OFB) October 2021 corporatization reform has significantly improved India’s state-owned defence manufacturing sector.
41 OFB production units, which had operated as a single government agency for almost 200 years, were reorganized into seven separate defense public sector enterprises (DPSUs) as part of the reform drive.
The goal of this reorganization was to bring more responsibility, efficiency, and corporate-style governance to a sector that has long been criticized for its lack of financial discipline, low productivity, low competitiveness, and cost overruns. The results have shown the desired impact almost four years after installation.
The combined net profit of the seven DPSUs in the fiscal year 2024–2025 (FY25) was ₹1,625 crore. This highlights the importance of the improvement accomplished, as it contrasts sharply with the financial situation just a few years before, when the OFB as a whole reported a loss of ₹2,844 crore in 2019–20.
In essence, the restructuring replaced an outdated departmental structure with separate corporate entities that are each in charge of their own operations, financial performance, and long-term strategic expansion. As a result, the units were able to follow financial discipline, embrace professional management techniques, and react more quickly to demands.
In keeping with the government’s broader “Aatmanirbhar Bharat” strategy for domestic defense manufacturing, the emphasis on corporatization also gave these organizations the freedom to modernize production procedures, make infrastructure investments, and look for export options. A growth chart showing this financial trajectory was released by the Raksha Mantri’s Office, which also claimed that the reforms were producing “remarkable results” and “new benchmarks in defence manufacturing.”
The reversal indicates a more significant structural change in the way India’s defense PSUs are anticipated to function moving forward, not just a change in profitability. The organizations have been able to take advantage of opportunities in both domestic and international markets, form alliances with both private business and foreign manufacturers, and expedite supply schedules for the military forces thanks to corporate autonomy and accountability.
By focusing on particular areas of defense manufacturing, such as ammunition and ordnance, armored vehicles, personnel equipment, and advanced technology, the DPSUs have also improved their strategic clarity and eliminated inefficiencies caused by bureaucracy that previously hindered productivity.
The reform also supports the government’s long-term objectives of decreasing reliance on imports and increasing defense industrial self-sufficiency. After decades of inefficiency and financial instability under the previous OFB structure, a net profit of over ₹1,600 crore in FY25 shows the potential of India’s state-owned defense industrial base when paired with contemporary management approaches.
This corporatization’s success is now being viewed as a model reform that could influence future policy decisions in India’s larger military-industrial ecosystem, promoting more public-private sector cooperation and raising India’s stature as a major exporter of defenses worldwide.
