Short answer; we're complicit to buy something from Russian to please them after numerous high value defence deals with West. Hence we bought whatever they shoved down our throats.
If our soldiers really were so adamant on getting an AK and we really cared about the CQB performance of 7.62x39mm then we could have easily gone for an upgraded Trichy Assault Rifle. Ironically a much better AK (milled vs stamped) but without paying any royalty or establishing a new factory and joint venture.
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USSR and China were the two very first country to adopt 7.62x39mm ammunition. Just google whether they're still using it or not.
Long answer; there are few terms like Ballistic Coefficient (BC), energy retention, supersonic flight, drift-drop and wound profile in external ballistic that are key to performance. Only a layman would go with the argument of "7.62x39mm kills, 5.56x45mm injures" instead of these parameters.
Caliber - Bullet - Weight - Velocity
5.56x45mm - Mk262 - 77gr - 2,700fps
7.62x39mm - M67 - 123gr - 2,400fps
Ballistic Coefficient (BC)
Bit cumbersome to calculate but it gives a dimensionless number which tells the bullets ability to overcome air resistance; the higher the BC the slower it'd lose velocity.
Approx BC for Mk262 is 0.4 and that for M67 is 0.3
Energy Retention
How much energy a bullet loses after every meter of travel because of air resistance and gravitational pull. The more energy a bullet would retain at the anticipated engagement range, the more damage it would do to the target.
For Mk262 it's 1,100ft-lbs @ 100yd, 780ft-lbs @ 300yd and 540ft-lbs @ 500yd.
For M67 it becomes 1,130ft-lbs @ 100yd, 610ft-lbs @ 300yd and 350ft-lbs @ 500yd.
Supersonic Flight
The faster (or supersonic) a bullet would go, the lesser it would get affected by wind and gravity. Also as a bullet would slowly decelerate from supersonic speed it would ultimately hit transonic speed...transonic speed scares aerodynamic engineers more than hypersonic; in this phase weird things start happening. Gere also the bullet might drastically lose its velocity or even simply tumble down if it goes transonic. So what we try to achieve is to maintain this supersonic speed for as long as possible.
A Mk262 is supersonic till 850yd. For M67 is 500yd
Drift & Drop
Continuation of the previous point. If it has comparatively higher velocity and lower weight then it would have lesser drift (bullets going sideways due to wind) and lesser drop (bullet going downward because of gravity).
At 300yd a Mk262 drops about 9" and at the same range it's a whopping 23" for M67. Similar ratios are for drift.
Wound Profile
Yellow line's at 30cm penetration depth
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Red line's at 20cm penetration depth
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