New Delhi: Russia has waived royalty in favour of technology transfer for AK 203 assault rifle. The plan to manufacture has been under discussion for almost two years, with the contract stipulating 100% transfer of technology and possible exports in future from the Indian plant. The factory in Amethi was inaugurated in 2019 but production is yet to commence.

As the AK 203 deal was being negotiated, the army placed import orders for the Sig Sauer 716 assault rifles, which were priced at Rs 89,000 a piece.

With Russia waiving a royalty clause in favour of technology transfer, the green signal has been given for the deal to manufacture AK 203 assault rifles at the Amethi factory. The Rs 5,124 crore contract is likely to be inked in the coming months, with production expected to commence next year.

Sources said all issues related to the cost and indigenisation content that had held back the project till now have now been sorted out and a go-ahead has been given by the Rajnath Singh-led Defence Acquisition Council.

Central to the cleared proposal will be a full technology transfer for the rifles that are to be manufactured in India. In earlier discussions, the Russian side had asked for a royalty on each rifle being produced in India. This has now been waived and India will pay for technology transfer, waiving the royalty.

The move, sources said, would result in saving of at least Rs 200 crore in the coming years and would ensure that India gets the knowhow to produce modern assault rifles that can also be exported in future. As  part of the contract, 70,000 rifles will be imported directly from Russia while 6,01,427 will be produced by an OFB-Kalashnikov joint venture.