The Request for Proposal dispatched to over 40 overseas vendors last month -- with bids to be submitted by mid-Feb 2012 -- requires the 3.66 kg AR's to convert to 7.62x39 mm and be fitted with Picatiny Rail-mounted reflex sights.
The ARs would also need to be equipped with under-barrel grenade launchers and be able to fire locally-produced ammunition.
The RfP also mandates a transfer of technology to the State-owned Ordnance Factory Board to locally make the ARs of which the eventual requirement is expected to be around 2 million for the army, the central paramilitary forces and state police in a massive programme estimated at $2-3 billion.
Armament industry officials, however, said that the exclusion of the private sector from this potential contract was at variance with the MoD's much publicised aim of privatising the monopolistic State-run military-industrial sector.
The imported ARs would supplant the INSAS 5.56 mm AR, which the army had inducted into service some 15 years and employed in counter-insurgency operations but consistently found it operationally inadequate.
The army's association with the INSAS AR programme has been turbulent and problematic.
For long it had objected to the Defence Research and Development Organisation-designed and OFB-built INSAS 5.56 mm AR introduced into service in the mid-1990s to replace the heavier and outmoded range of 7.62mm FNFAL self-loading rifles.
But despite protestations centred round the INSAS ARs sights that malfunctioned in cold regions and its firing mechanism that jammed at critical times, the army was 'persuaded' by the MoD to induct the rifle that took the DRDO nearly a decade to design and the OFB another four to build.
But frontline infantry and Rashtriya Rifles units deployed on counter-insurgency duties preferred the tested Kalishnikov-designed 7.62 mm AK 47 of which 100,000 were imported from Bulgaria in 1995 for $ 8.3 million as a 'stop gap' measure till the INSAS AR became operational.
And more recently in 2002 the army imported 3,070 Israeli Weapon Industries' 5.56 mm Tavor 21 AR (TAR 21s) for its Special Forces for around $ 20 million that were inducted into service 2008 onwards.
A contract for an additional 10,000 TAR-21's with reflex sights for newly raised paramilitary SF units is nearing fruition.
The INSAS AR's inadequacy also became a contentious issue between India and Nepal in August 2005 when the Royal Nepal Army (RNA) claimed the rifle supplied to it to battle Maoist guerilla's repeatedly malfunctioned, resulting in heavy casualties.
The RNA maintained that the AR "became too hot" and unusable for sustained firing during a particular firefight at Pili in Kalikot district, 600 km west of the capital Kathmandu in which 43 soldiers died.
Reacting irately to these charges, Indian officials said the INSAS rifles might have failed due to poor maintenance and the RNA's lack of experience in using them.
The DRDO's decision to develop the INSAS range of weapons in the early 1980's followed a proposal by the MoD to import around 8000 5.56mm ARs for select parachute regiments that later converted to SF.
The army wanted to replace the heavier 7.62MM SLR, its main assault weapon and Germany's Heckler & Koch's G 41 and Austria's Steyr AUG were short-listed with both vendors offering free transfer of technology in the $ 4.5 million contract.
Thereafter, the army's requirements doubled and the federal government facing a foreign exchange crunch turned down the import proposal.
The ubiquitous DRDO stepped in claiming to have made progress in developing the 5.56mm AR at its Armaments Research and Development Establishment in Pune but it took over a decade before the project fructified.
Weapon experts at the time claimed that the INSAS 5.56mm AR was eventually an 'amalgam' of Kalashnikov, FN-FAL, the G41 and AUG designs and overall not in consonance with modern engineering production techniques which, in turn, would render it expensive.
The INSAS AR was eventually priced at around Rs 16,000-18,000 per rifle compared to the imported Bulgarian AK 47's that cost around $93 each or around Rs 2800 at the prevailing exchange rate.
"The INSAS AR is a non-competitive weapon system and the army became a tied customer with little choice but to pay the asking price however high it might be and whatever operational objections it had to the rifle," a senior Infantry officer admitted.