Now the first procurement consequence (apologies in advance for its length).
As soon as light infantry is emphasised, a review of equipment weights would be due - including small arms and their ammunition. For the CAF, by the mid-'70s, the long and heavy 7.62 mm C1A1 rifle had been in Canadian service for over two decades. Light infantry would greatly benefit from more lighter and more compact small arms. Time for a replacement in 5.56 mm?
A move from 'battle rifle' to 'assault rifle' could be prompted by both the prior adoption of lighter M16 rifles by US forces in Vietnam as well as the 1974 service entry of the Red Army's new AK-74. So, let's move the RW Small Arms Replacement Project forward by a half decade. Introducing the totally imaginary SARP-75 programme. [1]
A Change of Scene?
To change the OTL arc of Canadian small arms, some institutional hand-wavium is required. RW, after all C1A1 production ended, the GoC shut down its Long Branch-based Crown Corporation, CAL Small Arms Division. That closure occurred in June 1976. In that same year, the GoC signed a new small arms maintenance contract with Diemaco Inc. - a privately-owned, Kitchener-based, subsidiary of Devtek.
At a glance the GoC actions seemed to make sense. Toronto-area real estate prices were booming and much of the CAL Small Arms Division plant was sub-leased to non-military producers anyway. But what if revenue from the sale of that old but more valuable Long Branch property had been used to just relocate to CAL Small Arms Division production to Kitchener instead? This would keep small arms production in GoC hands instead of drifting into foreign ownership (as Diemaco did - first with Colt, now under CZ).
What-If Small Arms Replacement Project - 1975 (SARP-75)
The most important part of SARP-75 would be the CAR (Canadian Automatic Rifle) project to replace the C1A1 with a new weapon chambered for 5.56x45mm M193 ammunition (later eclipsed by SS109 when that Belgian SS109 ammunition became NATO standard). A complete range of potential candidates was assembled after the CAF determined that a conventional rifle was preferred over any bullpup arrangements. [2] The final CAR programme candidates were:
1: Colt AR-15 = An 'Improved M16A1' variant (emerging as the M16A2 in 1983)
2: IMI Galil AR - Submitted by its NATO licensee, NWM De Kruithoorn N.V.
-- Galil AR ('Automatic Rifle'); 18-inch barrel; folding stock; 25-rd magazine
3: FN FNC 76 - Scaled-down FN FAL; later withdrawn from CAR competition*
-- * After performly poorly in NATO contests due to its rushed development
4: Heckler & Koch HK33 - 390 mm (15 inch) barrel; G3 wooden furniture
-- H&K roller-delayed blowback system modified to suit lower-power 5.56
5: Beretta AR70/SC70 - Assault rifle* and folding-stock carbine variant
-- * Fixed-stock AR70 saw limited Italian military service from 1972-73
6: SIG SG 540 - Swiss PV for export market and licensed production
-- SG 540 used AK-47 derived operating system; prod'n began 1973-74
CAR - The CAF C7/C8 Selection Process
A SARP-75/CAR selection committee would be tasked with assigning comparable values to each submitted design. A priority would be in getting new small arms into CAF service no later than 1980. After competitive trials, that committee would pare down the candidates and then select a winner.
I would imagine the selection committee acknowledging the SIG SG 540 as the superior type. But, working against quality, would be the high cost per weapon and justifiable concerns about Swiss export regulations (as already noted by
@GK. Dundas).
The FNC 76 had its appeal in closely resembling the in-service FN C1A1 (which would provide 'muscle memory' benefits while simplifying small arms training procedure development). Alas, FN had already withdrawn its 'carbine' from the SARP-75/CAR competition.
Although favoured as a potential supplier, Colt's AR-15 - in its 'Improved M16A1' form - would, ultimately, have to be judged to be immature in its development.
That leaves the Italian Beretta AR70/SC70; the West German Heckler & Koch HK33; and the Israeli IMI Galil AR still in the running. If you were a member of that SARP-75/CAR selection committee, which weapon type would you choose to become Canada's next C7 rifle and C8 carbine? [3]
_____________________________________________
[1] In OTL, the Small Arms Replacement Project began in 1980 and resulted in the Diemaco C7 and C8 based on the Colt 'Improved M16A1' but with a distinct barrel.
[2] This decision eliminated the British L64 (aka Enfield Individual Weapon) and French FAMAS F1 from consideration for any future Canadian Automatic Rifle.
[3] I would imagine manufacturer-built sample/trial weapons - C7 rifles and C8 carbines - supplied to instructors at the Infantry School, CFB Gagetown, and to Weapons Techs of a trials det attached to 4CMBG in West Germany. After trial results were compiled, CAL SAD-Kitchener would start producing service weapons - designated C7A1 and C8A1 (following the earlier C1/C1A1 designation pattern).
