Cost crisis hits AK-203

Cost crisis hits AK-203

Wed, 06/24/2020 - 22:44
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By Rohit Srivastava

Indian defence minister Rajnath Singh is in Russia to strengthen and discuss various aspects of the unique strategic partnership with Russia. He held a high level meeting with Russian Deputy Prime Minister Yury Borisov yesterday. The meeting is significant as India is urgently in need of various kinds of ammunitions as situation on Indo-Tibet border in Ladakh region between India and China is very tense.

On the other hand, reportedly, the Indo-Russian Rifles Pvt Ltd, a joint venture between Russia and India to manufacture AK-203 assault rifle is still trying to reach a reasonable price. Indian Ministry of Defence has set up a costing committee to come to a reasonable price.

Sources, suggest that each rifle will cost around INR 80,000. If the same rifles are bought from Russian plant would cost around USD 850 which in current conversion price would be over INR 63,000 (1 USD = INR 75).

The cost of the assembled guns are expected to be somewhere between the Russian manufactured and fully indigenised guns.

Sources, further add that the JV team is yet to hold one to one meeting with the cost negotiation committee of the Ministry of Defence.

As reported earlier, 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. 

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.