Lucknow, New Delhi: With the much anticipated deals for AK 203 assault rifles and the Kamov helicopters getting delayed, India and Russia are aiming to seal a multi-billion-dollar missile deal before Prime Minister Narendra Modi’s visit to Moscow in May.
Russia’s IGLA-S system was chosen as the lowest bidder for India’s short-range air defence missile system (VSHORADS) programme. The Army has an immediate requirement for 800 launchers and over 5,000 missiles.
The deal had, however, run into trouble as two other competitors – SAAB of Sweden and the European firm MBDA – officially registered complaints against the trials that gave the Russians an edge.
These missiles are meant to counter low-flying aircraft as the last line of defence against flying objects in a multi-layered air defence system.
The procurement process for the VSHORADS began shortly after the Kargil War in 1999.
This was after two Indian aircraft — a MiG-21 and a MiG-27 — were possibly shot down during the war by a Pakistani close-in weapon called the Anza (probably the derivative of a Chinese system).
Defence sources told ThePrint that both India and Russia are aiming to ink the deal ahead of Modi’s visit or during the trip itself.
“The issues with AK 203 will be resolved soon but not in time for Modi’s visit. The Kamov deal is still a work in progress. The only defence deal that can be completed by May is the VISHORADS,” a defence official told ThePrint.
This would be yet another major deal between the two countries after the one for S400, frigates and lease of a second nuclear submarine amid the threat of US sanctions.
However, both New Delhi and Moscow have worked out a deal to circumvent the banking restrictions. Initial payments for both the frigates and the S 400 have been made by India.
Economic Times has reported that New Delhi is again likely to change the bank it uses for payments to Russia in the future.
The delay in AK 203
The delay in the AK 203 assault rifle deal has been the cost factor. The Indo-Russia Rifles Private Limited, established between the Ordnance Factory Board (OFB), the Kalashnikov Concern and Rosoboronexport — the Russian state agency for military exports — have failed to arrive at an offer price for the rifles. Prime Minister Narendra Modi had himself inaugurated the joint venture in March last year.
According to the plan, the 7.62×39 mm Russian weapon is meant to be manufactured at the Korwa Ordnance Factory in Uttar Pradesh’s Amethi district. It is expected to cater to the Army’s need for 6.5 lakh rifles.
“In the meeting held this month, the JV could not come to an agreement about the offer price to the Army, which is a must before things are to move on,” a source said.
It was expected that the price of each rifle would be around $1,100 per piece but it has risen due to a number of issues, sources said.
Sources said that the problem is that while Make in India will work out to be cheaper in the long run with high volumes, the initial investment is very high keeping the requirements and setting up of facility is concerned.
Sources said that another round of meeting is planned soon and it is hoped that the offer price will be firmed up but a contract is not possible before Modi’s visit.
Kamov gets delayed too
The deal for the minimum 200 Kamov 226T, announced by Modi in 2015 to replace the ageing Cheetah and Chetak choppers, is also getting delayed.
The main issue is with the cost and the indigenisation content, sources said. Incidentally, the Indo-Russian joint venture, set up to make the light utility choppers in India, won’t meet the 70 per cent indigenous content requirement, as reported by ThePrint.
Under the original RFP, there is a requirement of 70 per cent indigenisation of Russian content — which stands at 74 per cent — in the lightweight military helicopters.
“The Kamov deal will take much longer than the AK 203. And hence the only focus right now is the contract for VISHORADS,” one of the sources cited above said.