Small arms factories saw little demand from armed forces between FY16 and FY20: PAC report

NEW DELHI: Small arms factories witnessed either “no demand or very little demand” from the armed forces for their principal items such as 5.56 mm INSAS rifle, 5.56 mm LMGs and 9 mm auto pistol between FY2015-16 and 2019-20, with factories becoming largely dependent on orders from home ministry, Public Accounts Committee (PAC) said in a report presented in Parliament on Wednesday. However, MHA orders alone were “insufficient” to utilise the full production capacity of three such factories, it said.The panel in its 54th report on ‘Production of Small Arms in Ordnance Factories’, based on CAG Report No. 5 of 2023 relating to defence ministry (Department of Defence Production), noted with concern that the “combination of no further Army demand, insufficient MHA demand and production shortfalls even against MHA orders led to idling of production capacity across all three factories”. It felt that “this may result in a lot of wasted potential for the ordnance factories whose capacities may be utilised better if the orders are received continuously”. The committee recommended that the “ministry consider institutionalising a multi-year roll-on demand plan between the Army, MHA, state police forces and AWEIL so that factories aren’t caught idle after sudden demand drop-offs”.Simultaneously, the factories “failed” in their objective to develop new products, the panel said, adding that non-achievement of production targets led to “accumulation of inventory”.Committee also noted that small arms factories operated with “high overheads”, driving up unit production costs, while the issue price was fixed well below the actual cost of production (based on the previous three years’ costs, which were themselves elevated). This resulted in cumulative losses of Rs 366 cr across the three factories for 12 selected small arms during 2015-20, it said.