The Army’s search for a new assault rifle to arm its troops has left the private industry utterly confused as two parallel procurement procedures seem to be in play — one a competitive process with the Indian industry in the lead and the second, a direct purchase from Russia for the arms to be made by a public sector unit.
At stake is the Rs 12,280-crore requirement for 6.5 lakh new assault rifles the army needs urgently to replace older INSAS guns. The rifles are to be made in India with the number expected to go up as other services would also require them in future.
For several months, a series of talks have been on with the Russian government for a direct purchase of AK103 assault rifles to be manufactured by a joint venture firm in India led by Ordnance Factory Board (OFB).
Officials in know of the details told ET that several rounds of talks have been held on the localisation content and transfer of technology between technical teams from the two sides. There is an expectation that an intergovernmental agreement could be signed for the deal within a few months to start the process.
However, only last month the Army also received proposals from the Indian industry in response to its request for information to produce 6.5 lakh of the rifles under the Buy and Make (Indian) category.
Interestingly, the AK103 has also been added as a contender to this process too, with a proposal received from the Adani Group to supply the rifles in partnership with the Kalashnikov Concern. While responses from several potential competitors have been received, there has been little clarity to the industry on how and if the process would go on.
Sources told ET that in meetings before the bids — which also contain price estimates for the rifles to be produced in India — the industry was categorically told that only 25% of the total quantity required would be reserved for the Ordnance Factory Board (OFB) while the rest would be open to the private sector.
However, the talks with Russia have given the project new turn. While a competitive process of procurement is the most preferred model for an order of such kind in which several contenders are available across the globe, the defence ministry can technically abort the private sector-led process. The last time a major competitive process was overturned in favour of a direct government purchase was the Rafale deal that has now come under controversy.
Among international contenders that want to partner with Indian industry for the contract are Arsenal (Bulgaria), Sig Sauer (US), IWI (Israel), Beretta (Italy), Colt (US) and Caracal (UAE). It is believed that Indian companies interested in the contract include the Punj Lloyd group, Reliance Defence, the Kalyani Group among others.