Defence sources also ruled out that the army has shortlisted any particular gun to replace the INSAS, which had entered service in the late 1990s.
"A Request for Information is likely to be issued soon for single calibre guns. This will be open to all," sources said, adding that the project would finally be taken up as part of the 'Make in India' initiative.
That was because troops use AK-47s in counter-insurgency operations while the INSAS rifles are issued for peace stations.
However, none of the firms which had pitched for the contract could satisfy the army with sources saying that the General Staff Qualitative Requirements "could well have been too ambitious".
"There was no point on working on something that cannot be worked out," the sources added.
Army had on June 15 informed the four short-listed international firms that it was retracting the multi-crore contract.