Desi Kalashnikov misses its price target – Defence News of India

Desi Kalashnikov misses its price target – Indian Defence Research Wing


At a time when Indian soldiers need new modern rifles due to heightened border tensions with both China and Pakistan, the much-touted project to make the iconic Kalashnikov assault rifles in India has run into rough weather yet again. The defence ministry (MoD) earlier this month was forced to appoint a costing committee due to the “unreasonable and unacceptable” price quoted by the Indo-Russia joint venture to make 6.71 lakh AK-203 rifles, a derivative of the famous AK-47, at Korwa ordnance factory in Amethi district of Uttar Pradesh.

Sources said defence minister Rajnath Singh discussed pending issues in the rifle project during his ongoing visit to Russia, where he met Russian deputy prime minister Yury Borisov and defence minister General Sergei Shoigu on Tuesday. The five-member costing committee, set up by the MoD on June 11 by invoking a special clause of the Defence Procurement Procedure, has been asked to fix a “reasonable price” for manufacturing the basic version of the 7.62×39 mm calibre AK-203 rifle.

The joint venture IRRPL between the Indian Ordnance Factory Board (OFB) and Russian Rosonboronexport and Kalashnikov company, which was set up in February 2019, will have to perforce share pricing and other data with the costing committee. “The contract would have been inked by now if the OFB through the JV had submitted a proper bid. The manufacturing process for the urgently-required rifles would have begun in this project of national importance. But now, it has been inordinately delayed,” said a source.

The Defence Acquisitions Council headed by the defence minister had granted “acceptance of necessity” (AoN) to procure the 6,71,427 AK-203 rifles at an estimated price of Rs 4,358 crore way back in January 2019. “But the JV first sought repeated extensions to submit its techno-commercial bid and then when it did in February this year, it quoted a price much higher than the benchmark price,” said the source.
Moreover, in a bid to reduce the price of the rifles at the JV’s request, the MoD had approved the incorporation of a price variation clause as well acceptance of corporate guarantee or indemnity bond in lieu of bank guarantees. Separate quotes for the initial 1.2 lakh rifles and the rest 5.5 lakh guns to be made indigenously were also sought. But the OFB quoted a very high price as compared to the 5.56mm INSAS (Indian small arms system) and 7.62mm Trichy assault rifles it manufactures.

The committee, which has to submit its report in two months, will also determine the manufacturing cost of the AK-203 rifle after 100% indigenisation. It will also take into consideration the 2019 prices at which the OFB has manufactured the INSAS and Trichy assault rifles. The AK-203 rifle project, headed by a serving majorgeneral, was supposed to be a boost for the over 14-lakh strong armed forces, which have been demanding new assault rifles for over 15 years to replace the existing glitchprone INSAS rifles.

Army troops deployed on the frontline are now getting a limited quantity of just 72,400 new 7.62x51mm assault rifles with “a longer kill range” from the US firm SiG Sauer under the fast-track procurement route under the Rs 647 crore contract inked in February last year. But the bulk of requirement was to be met through the AK-203 rifles, which have “an effective range” of 300metre, and the armed forces are still waiting for the project to kick off.