Parliament Parliamentary Committee
Ordnance factories hold ₹641 crore inventory, 56% work-in-progress
The Public Accounts Committee examined the production of small arms in Ordnance Factories (now under AWEIL) to assess efficiency, costs, and quality, which impacts the supply of equipment to the Indian armed forces and police.
641 croreInventory of Rs 641 crore held by three selected factories as of March 2020, with 56% accounted as work-in-progress.
Who it concerns: Ministry of Defence (specifically Advanced Weapons and Equipment India Limited/AWEIL and its constituent factories); affects the Indian Armed Forces, Central Armed Police Forces, and State Police Forces.
What the committee found
- Limited demand from armed forces between 2015-16 and 2019-20, with insufficient demand from the Ministry of Home Affairs to utilize full capacity.
- Recommendation for a multi-year rolling demand plan between the Army, MHA, state police, and AWEIL to prevent idle capacity.
- Accumulation of inventory worth Rs 641 crore as of March 2020, with store holdings exceeding prescribed limits by 156 to 241 days.
- Recommendation to strengthen inventory management with cost-efficiency metrics and improve demand forecasting.
- Cumulative losses of Rs 366 crore (2015-16 to 2019-20) and Rs 234 crore (2023-24 to 2025-26) due to high production costs and issue prices fixed below production costs.
- Recommendation to benchmark costs against private manufacturers and diversify products (e.g., sporting rifles, spares) to increase revenue.
- Quality issues including 269 accidents reported by the Army (2015-16 to 2019-20) and high rates of product returns due to recurring defects.
- Recommendation to shift from end-of-line inspections to in-process quality checks and implement thorough monitoring mechanisms.
- Failure of Ordnance Factory Board (OFB) R&D projects to meet original completion dates and duplication of efforts across factories.
- Recommendation to allocate a larger share of budgetary grants for R&D and review ongoing projects to meet armed forces requirements.
Also in the document
- Inventory of Rs 641 crore held by three selected factories as of March 2020, with 56% accounted as work-in-progress.
- Cumulative losses of Rs 366 crore across three factories on selected small arms between 2015-16 and 2019-20.
- Cumulative losses of Rs 234 crore for the three factories between 2023-24 and 2025-26 post-corporatisation.
- The Army reported 269 accidents involving four small arms between 2015-16 and 2019-20.
- None of the R&D projects undertaken by OFB were completed by their originally planned completion dates.
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The original document
Parliamentary Standing Committee reports (via PRS Legislative Research)
Committee report · Ref. production-of-small-arms-in-ordnance-factories
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