Bengaluru: India and Russia are close to concluding an Inter-Governmental Agreement (IGA) for a multi-billion deal to locally bulk manufacture AK-103 assault rifles in the next few months, Victor N. Kladov, Director International Cooperation and Regional Policy of Rostec State Corporation told The Hindu at the ongoing Aero India.
However, he brushed aside concerns of U.S. sanctions on the defence deals, flagging money transfers as the issue.
India has signed several multi-billion dollar defence deals with Russia in the last couple of years and more are in the pipeline.
“We expect it to be signed anytime soon. It is in the final stage of negotiations. A Government-to-Government agreement is being prepared and will be signed in the nearest future. Upon signing that, there will be direct business negotiations between Kalashnikov from our side and India’s Ordnance Factory Board (OFB), Mr. Kladov said in a conversation with The Hindu.
The Army has recently signed a contract for 72,400 assault rifles from Sig Sauer of the U.S. and another tender for 93,895 Close Quarter Battle (CQB) carbines is in advanced stage of conclusion. These rifles are for frontline troops deployed in forward areas.
However, the Army is looking to replace the indigenous INSAS (Indian National Small Arms System) rifles in use with a modern rifle. The AK-103 will be bulk produced by the OFB with technology transfer.
Mr. Kladov stated that initially different companies were proposed from the Indian side for the tie-up. However, the Indian government realised it would be “wrong to pick up a start-p company” and arrange for production of such sophisticated equipment, he stated.
OFB was set up by the government to produce small arms and ammunition which is why it is easier for them to absorb technology as they already produce a lot, Mr. Kladov stated. “This agreement is already at a very high state of readiness.”
India recently signed deals for S-400 air defence systems and stealth frigates and one for Kamov-226T helicopters is in an advanced stage of negotiations. The deals are progressing in the backdrop of the looming threat of U.S. sanctions.
Mr. Kladov said the sanctions to a certain extent may influence their (Russia) cooperation with some countries as they face “immense outside pressure and even threats and it influences their decision making.” “But a country like India is not subject to outside pressure… Once we see an obstacle to our cooperation, we overcome it or we bypass the obstacle,” he stated.
Here he flagged the issue of payments and money transfer as a matter of concern. “There is only problem of streamlining banking structure and balancing mutual trade,” To address this leaders of the two countries have already agreed to use the national currencies for payments (rupee-rouble exchange).
In a bid to improve after-sales support and spares availability, a major concern of Indian armed forces with Russian equipment, Mr. Kladov said 14 Russian holding companies have now been given rights to do direct deals for after-ales spares and support. “They are free to set up Joint Ventures for lifetime support. We are moving to a new model of servicing,” he added.