At a time when Indo-Russia joint venture to manufacture AK-203 is far from start, Armenia will begin production of AK-103, improved version of AK-47, from coming July. An agreement for production of 50,000 rifles was signed between Russia and Armenia on May 15, reported Interfax.

According to the report, the license is valid for next ten years. The production will take place in two stages. Initially, the guns will be produced by assembling the imported parts and subsequently, by manufacturing simple parts at the Armenian facility.

The guns are intended for Armenian army and Special Forces. Armenia is Russian ally in caucus region and also hosts a military base.

Besides India, Venezuela is also expected to begin Kalashinikov production next year. Saudi Arabia is also one of the buyer of AK-103.

Last year during the Dubai Air Show, the head of Rostec Corporation told reporters that the talks on building a plant on manufacturing Kalashnikov rifles in Saudi Arabia are now at the final stage. Russia began delivery of AK-103 to Saudi Arabia in February last year.

Reportedly, many Middle Eastern countries have shown interest in the new line of Kalashnikov rifles.

On the other hand, Indian Prime Minister Narendra Modi, in March last year, inaugurated Indo-Russian joint venture to manufacture AK-203 assault rifle. According to the Inter-Governmental Agreement (IGA), Russia will provide technology, manufacturing know-how and special materials. The IGA allows the JV to export the guns to any third country as well.

The two sides have aimed at 100 per cent localization within the first two years of the project.

After one year and three months, the production is yet to commence at the Joint Venture plant at Amethi.

As reported by IDI in January, the JV was struggling with pricing of the gun. The last date for submission of the tender was December last year but was extended for two months.

The current base price is hovering around INR 65,000/ per rifle which does not include royalty and 15 per cent profit for the joint venture.

Before signing the agreement, two sides had agreed to keep the price below USD 1100 per rifle.

The Indo-Russian Rifles Pvt Ltd, a partnership between Indian Ordnance Factory Board (OFB) and Russian Kalashnikov Concern to manufacture around 7.5 lakh rifles which will go on to replace the INSAS rifle, the current standard issue to Indian soldiers. 

Now, the scenario has changed. Recently, government announced corporatisation of OFB, the Indian partner. Given the high cost of production in a new plant, keeping price low is a challenge for the JV. One can only anticipate the kind of problems that may emerge during the corporatisation of OFB.

The AK-203 is very crucial for Make in India. The 100 percent indigenisation of the rifle will provide India with much required skill and production techniques and will spawn an ecosystem of suppliers in the UP defence corridor. This project was inaugurated with much fanfare and shown as a great beginning for UP defence corridor. It has the potential give a great start to the corridor.

The gun is better replacement of INSAS rifles. If one includes all central and state armed police requirements then the requirement for a modern rifle will be over three times the intended numbers. The JV is also expected to export to friendly nations.

The JV is expected to provide direct job to 200 people and once full manufacturing begins the direct and indirect jobs will multiply. Moreover, for business environment, it is important that signed joint production must not get shelved or delayed.