Much smaller countries managed to develop a clone of AK rifle. India is home country of many smart individuals, some of them surely could modify AK to their own needs. INSAS rifle has relatively slow rate of fire and 3-round burst is probably not a good idea. Soldiers easily could, and probably would want to fire 2-round bursts without help of the mechanism.

The AK is not copyrighted India could easily build a factory to produce the AK in any caliber they wish There are AK's available here in the U.S in 7.62x 39, .223, and .308 They all work well. These modern AK's all have side or handguard rails for optics, lights and lasers. Or India could just buy rifles from abroad. This would not inspire national pride, but would be cheaper and effective. I am certain the Bulgarians, Chinese, or Romanians would all be glad to pay the bribes and set up the factory for them