Representatives from Izhmash, the gun's original manufacturer, discovered what they see as an Indian rip-off of the AK-47 at an arms fair in Delhi.
But India's Ordnance Factory Board says the weapon is different enough to count as a distinct design.
AK-47 copies are produced in dozens of countries, but only a handful have formally licensed it.
The row blew up, Izhmash representatives told Agence France Presse news agency, when the man who invented the AK-47 in World War II visited OFB's pavilion at the arms fair and saw what he thought was a copy of his brainchild.
"I don't see any permission being given to India to manufacture the rifle" and sell it for export, said Izhmash's Andrei Vishnyakov.
Russia is India's largest supplier of weapons - although not of AK-47s.
'Threat'
The new weapon has yet to appear on OFB's website, which advertises products ranging from pistols to main battle tanks.
Still, OFB staff were keen to deny the accusation.
"The cocking mechanism is different, the lever has been changed and the barrel is chrome-plated," OFB gun designer Mohammad Ali told AFP.
For general manager MK Garg, Izhmash's complaint rests on a false premise.
"The Russian Kalashnikov was made in 1947 and no patent in the armament industry is valid beyond 30 years," he said.
"It seems they are threatened by our product."
Who owns what?
Izhmash has run into copyright problems before.
Russian companies spent two years disputing who controlled rights to the AK-47 before Izhmash finally won sole control in 2002.
But the millions of copies sold in arms bazaars over the world - and appearing on at least one national flag (Mozambique's) as well - have yet to produce much in the way of royalties.