Headache lol? You're talking about an establishment that had never previously developed a tank engine attempting to jump straight into something as exotic as a 1,500 hp air-cooled VCR (Variable Compression Ratio) engine on its very first try. Unsurprisingly, that effort didn't go anywhere. As far as I know, it could only develop around 1,000 hp on the dynamometer.
At the time of Arjun's development, West Germany was regarded as a key strategic partner and provided important consultancy services, along with several critical subsystems such as the gun control system, tracks, suspension seals, and, of course, the powerpack. That is why the decision was made to import the engine. However, it's worth noting that the Germans were not willing to provide the MTU 873. The MTU 838 used in the Arjun was essentially a custom-built variant tailored to Indian requirements.
That said, CVRDE did have a backup option in mind in the form of the Cummins QST-30, a civilian engine adapted for Arjun requirements through the reconfiguration of its peripheral systems. It was paired with the RK 304S transmission and underwent limited trials around 2007–08. Very little information about this effort is publicly available.
At present, CVRDE is reportedly working on a T-shaped powerpack configuration derived from the NGMBT's 1,500 hp engine. This spin-off derivative is referred to as the CV1500A.