NEW DELHI— The Indian Defence Ministry — faced with a shortage of ammunition for its Russian-made T-90 tanks, coupled with an inability to produce ammunition at home — has no choice but to give in to Russian terms and purchase marked-up ammo from Moscow, an MoD source said.

The MoD reluctantly agreed to the deal last month, despite the fact that Russia hiked the price by 20 percent and refused to accept offset obligations.

Russia will receive a $197 million contract for the fin-stabilized armor-piercing discarding sabot. In 2011, the asking price for the same order was $163 million.

Besides jacking up the price, the Russians also refused to transfer technology for making the rounds to the state-owned Ordnance Factory Board (OFB), a demand India has been making for the past five years, the MoD source added. A diplomat from the Russian Embassy merely said the sale of T-90 ammunition was on agreed-upon terms, and refused to give details.

India was forced to agree to the terms because OFB’s efforts at making the ammunition failed, an Indian Army official said.

“India bought T-90 tanks from Russia without transfer of technology for ammunition, which has resulted in perpetual shortages for the ammunition,” the official said.

“There were reportedly multiple problems in procurement of T-90 tank ammunition,” said Rahul Bhonsle, retired Indian Army brigadier general and defense analyst. “The ammunition produced in India was not compatible with the fire-control system of the tanks, thus these have to be modified. The Defence Research and Development Organisation [DRDO] has not been able to resolve the problem, hence there is a challenge. Meanwhile, there was apparently no fallback plan, thus orders had to be made to the single supplier, which hiked the prices thus compounding the problems.”

A DRDO official said technology for the ammunition actually has been developed and transferred to OFB.

The Indian Army official, however, said the ammunition developed by DRDO is only for the T-72 tanks. The ammunition failed when it was used in the T-90 tanks.

“The OFB has failed to produce ammunition for T-90 tanks because it is far more sophisticated than ammunition for Russian made T-72 tanks,” Bhonsle said. “Because in the case of T-90 ammunition, there are intricate linkages with the fire-control computer.”

“The way out of the ammunition crisis is the need to tie up with overseas original equipment manufactures [OEMs],” said defense analyst Nitin Mehta. The rise in demand for T-90 ammunition as the fleet strength increases will be an attraction for OEMs to come forward to partner with Indian companies in producing the required ammunition, Mehta said.

The Indian Army operates more than 500 T-90 tanks, and plans to increase the strength to more than 1,300 by 2020 through license-production at Indian facilities.

An executive at a domestic private company said OFB has a monopoly on ammunition.

“The private companies [focus on] propellant and explosives, and not in the filling of the shell or rocket motor,” the executive said.