Russia makes unprecedented decision to assemble Kalashnikov rifles in India

The contract for the purchase of Kalashnikov assault rifles by the Armed Forces of India is worth $590 million, RBC reports. A joint Russian-Indian enterprise is to launch the production of Kalashnikov assault rifles in India in early 2022.

The contract between the Russian-Indian company Indo-Russian Rifles Private Limited and the Indian Ministry of Defense for the licensed production of 680,000 Kalashnikov AK-203 assault rifles for the Indian Armed Forces decreased by almost $100 million and ultimately amounted to as much as $590 million, a source close to the Indian Embassy told RBC. The memorandum on the production of Kalashnikov rifles within the framework of a joint venture between India and Russia was signed in February 2019.

The production of Kalashnikov rifles will kick off in the first quarter of 2022, if the final contract is signed, the Kalashnikov press service told RBC.

It is assumed that Russia and India will sign the contract for the production of Kalashnikov assault rifles during Russian President Vladimir Putin's visit to New Delhi. Putin's meeting with Indian Prime Minister Narendra Modi is like to take place on December 6.

New Delhi had a request for urgent supplies of Kalashnikov assault rifles. Therefore, Kalashnikov will supply 70,000 assault rifles at first, and the remaining 610,000 will be assembled in India, Indian publication Times Now said in November.

"Russia went for an unprecedented high level of localization and speed of technology transfer,” a source in Russia's defence industry told RBC. With 100% localization, the Indian-assembled Kalashnikovs will be priced at $930 per unit. The Indian joint venture will reach the level of 70% localization within 32 months, the source said.

It is an open secret that India is one of five largest buyers of Russian arms. In 2020, exports of SSSS category goods (hidden sections of customs statistics, which include, inter alia, weapons, ammunition, aircraft and helicopters) from Russia to India amounted to $666.5 million (about $608 million in nine months of 2021). In 2018, Russian arms exports to India totalled $1.2 billion.

In July 2019, Bloomberg reported that Russia and India agreed to switch to Russian rubles in payments for Russian arms shipments in order to protect the deals from US sanctions, which affected state export agent Rosoboronexport and Russian arms manufacturers.

The controlling stake (50.5%) in the joint venture for the production of AK-203 assault rifles belongs to the Indian side, while Rosoboronexport and the Kalashnikov Concern (both remain under strict US sanctions that prohibit payments in dollars) own 49.5%, the Indian Ministry of Defense reported in 2019. This means that the US does not block the joint venture.

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