After Anil Ambani’s Reliance Defence, Adani Group is keen to join the lucrative the Indian defence industry. But the Modi government has scrapped Russia’s proposal to make Adani partner for joint production of AK-103 assault rifles worth Rs. 3,000 crore.
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In April, the two governments had agreed that the Russian company, Kalashnikov Concern, will only partner Indian Ordnance Factories owned by the government.
As per the sources, the Defence Ministry last month rejected the Russian proposal on grounds that the foreign vendor did not have the option to select the Indian company in joint manufacturing partner, including the transfer of technology, in inter-government agreements.
“We have conveyed to the Russians that if they insist on Adani as their partner, they should come through the tender route,” sources said.
To further its Make in India programme, the government had been keen on promoting the private sector in defence manufacturing, but the political dispute around discharge of offsets in the Rafale deal by Anil Ambani’s Reliance Defence has led to greater caution on the part of the government.
According to the sources, Reliance was allowed to be chosen by Dassault as its offset partner for the Rafale deal because it doesn’t involve joint production and transfer of technology to Reliance Defence. Moreover, the price discovery of the French fighter jet was done through a bidding process which started under the UPA government.
The development could postpone the conclusion of the government-to-government deal which was to be inferred before the visit of Prime Minister Narendra Modi to Russia this October.
The inter-government agreement to buy six lakh AK-103, worth nearly Rs 50,000 a piece, was initiated during defence ministers Sitharaman’s Moscow visit in April. At that time, it was mutually agreed that Indian Ordnance Factories would partner the Russians.
In July, the Russians put in a request that they be allowed to partner Adani (Defence & Aerospace) for the joint manufacturer of assault rifles in India. Kalashnikov Concern, the Russian firm, is offering the AK-103, an advanced version of the AK-47/AKM rifle, numerous quantities of which are in use by the Indian Army, police and paramilitary troops.
It is providing licensed production of the AK-103 to remove the lucrative Indian market away from former Warsaw Pact countries which obtained AK-making knowhow from the former Soviet Union and have been selling stockpiles at throwaway prices.