India poised to sign AK-203 deal with Russia

India is expected to sign a deal with Russia in December to locally produce about 700,000 Kalashnikov AK-203 assault rifles (seen here) for the Indian military. (Dmitry Fediushko)

The Ministry of Defence (MoD) in New Delhi is set to finalise an agreement with Russia to locally produce 700,000 Kalashnikov AK-203 assault rifles for the Indian armed forces. The deal is expected to be completed during Russian President Vladimir Putin's visit to India in early December.

Senior Indian Army (IA) officers and industry officials told Janes on 16 November that matters related to royalty payments, which Russia had previously demanded, have now been resolved and a INR51.24 billion (USD687.7 million) contract will be signed next month.

“After months of extensive negotiations, Russia had opted to waive the royalty clause in the contract in keeping with India's demands,” former Brigadier Rahul Bhonsle of Security-Risks, a defence management consultancy in New Delhi, said. The production of the rifles is expected to begin in early 2022, he added.

Under a bilateral Intergovernmental Agreement signed in 2019, the AK-203 7.62 mm rifles will be produced by the Indo-Russian Private Limited (IRPL) joint venture at Korwa. Industry officials said IRPL would be required to locally source all rifle parts and components within 18 months of starting production.

The IRPL facility was previously operated by the state-owned Ordnance Factory Board (OFB), before the enterprise was dissolved in September. IRPL is now run by two new state-owned firms, Advanced Weapons and Equipment India Limited and Munitions India Limited, both of which emerged out of OFB's dissolution.

The Indian firms collectively hold a 50.5% stake in IRPL, with Kalashnikov owning a 42% share and Russian defence export agency Rosoboronexport owning the remaining 7.5%.