Defence PSUs sell assault Rifles at a loss

Three government small arms manufacturing companies have together suffered losses of 366 crore over five years from 2015 on selling 12 different category of guns to armed forces, central armed police force (CAPFs), state police and civilians at prices lower than the cost of production due to unimaginative policy and high-cost overheads.

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As per the pricing policy of the Ordnance Factory Board, the price of guns was fixed mainly on the basis of the actual cost of production for the past three years, the issue price for the previous year and the latest estimated cost as per the trend of material, labour and overhead costs for the current year.

The annual price increase was limited at 8 per cent over the previous year by the Ministry of Defence in case of selling the arms to armed forces, with directions that the prices have to be cheapest for them.

For the Ministry of Home Affairs, which bought arms and ammunitions for entral Armed Police Forces (CAPFs) such as BSF, CRPF, ITBP and CISF, the prices were plus eight per cent of the offer made to armed forces in that year.