For the production of over six lakh AK-203 assault rifles in India, the localisation plan between the joint venture -Russian Rifles Private Limited (IRRPL) and the newly formed Advanced Weapons & Equipment India Ltd. (AWEIL) has yet to be finalised.
India and Russia had decided to set up a Joint Venture which was between the erstwhile Ordnance Factory Board which was holding 50.5 percent; Kalashnikov Concern of Russia is holding 42 percent and Export Agency Rosoboronexport of Russia holds 7.5 percent.
The Defence Acquisition Council (DAC) under the chairmanship of defence minister Rajnath Singh had recently approved the manufacture of the long awaited assault rifles at a facility which is located in Uttar Pradesh (UP). The approval for the production of the rifles came ahead of the annual summit between India and Russia on December 6, 2021, when the Russian President Vladimir Putin will be present physically.
In October 2021, the OFB was formally dissolved to form seven new companies as part of the government’s plan to corporatize OFB. And, as has been reported earlier in Financial Express Online, the Ministry of Defence had decided to convert all the pending deals worth around Rs 65,000 crore with 41 factories under the OFB to the newly created seven companies.
As reported earlier, in August 2021, AWEIL was officially incorporated under the Companies Act 2013. And on October 1, 2021 as notified by the Department of Defence (DDP), the business started.
Did the JV between Russian entities and OFB move automatically to the new company?
No. Sources have confirmed to Financial Express Online a fresh JV has to be inked between AWEIL, one of the seven new DPSUs and IRRPL. In November, the draft contract for the localisation was expected to be shared by AWEIL; this is delayed.
How many assault rifles are required?
The number of assault rifles has gone down to 6.01 lakh from 6.71 lakh. This is after the around 70,000 AK-103 rifles were purchased off the shelf earlier this year.
More about the contract
This is under the Make in India initiative and as per informed sources, the deal is based on three contracts which are between the JV IRRPL and Ministry of Defence; it is also between IRRPL and the Rosoboronexport; and AWEIL and IRRPL. All the three contracts need to be sealed before the localisation of the production starts. The manufacturing of the assault rifles has to be completed in 32 months.
Where is the delay?
It is with the localisation plan. This is important as it will help in faster implementation of the contract and indigenisation of the rifles.