Already under Opposition fire over the Rafale fighter deal with France, the government has turned down a Russian request to make the Adani Group its partner for the joint manufacture of Rs 3,000-crore worth of AK-103 assault rifles for the Indian Army.
In April, the two governments had agreed that the Russian firm, Kalashnikov Concern, will only partner government-owned Indian Ordnance Factories.
Sources said 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 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 controversy 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
Reliance, sources said, 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 delay conclusion of the government-to-government deal which was to be concluded before the visit to Russia this October of Prime Minister Narendra Modi.
The inter-government agreement to buy six lakh AK-103, worth nearly Rs 50,000 a piece, was initiated during 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 production of assault rifles in India.
Kalashnikov Concern, the Russian firm, is offering the AK-103, a modernised version of the AK-47/AKM rifle, numerous quantities of which are in use by the Indian Army, police and paramilitary forces.
It is offering licensed production of the AK-103 to wean 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.