India has opted to buy Israel's Spike anti-tank guided missile, an Indian Defense Ministry source said on Saturday, rejecting a rival U.S. offer of Javelin missiles that Washington had lobbied hard to win.
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India will buy at least 8,000 Spike missiles and more than 300 launchers in a deal worth 32 billion rupees ($525 million), the source said after a meeting of India's Defense Acquisition Council.
On Thursday, Haaretz reported that India will buy hundreds of Israeli-made Barak missiles for its battleships late next year, following approval of a weapons deal between the two countries that had been delayed for years.
India is also said to be deliberating about purchasing Israel-made AWACS surveillance aircraft, in line with a similar purchase about a decade ago. If the AWACS deal, which is estimated at over $1 billion, goes ahead, it would be a major win for Israel's defense industries.
Israel's defense ties with India have long been regarded as close, but Israel observers expect them to get even closer under new Prime Minister Narendra Modi.
The Indian defense minister visited Israel in July to discuss additional arms packages with the local defense industries.
In recent years, Israel has been regarded as a central weapons supplier to the countries of southern Asia, with exports to the region amounting to $3.9 billion dollars in 2013.
Israel has extensive security relations with India and is considered a major arms supplier to several south Asian countries. With a staff of six, its military delegation in India is second only to that of the United States.
Modi's five-month-old government wants to clear a backlog of defense orders and boost India's firepower, amid recent border tensions with China and heavy exchanges of fire with Pakistan across the Kashmiri frontier.
"National security is the paramount concern of the government," the source quoted Defense Minister Arun Jaitley, who also holds the finance portfolio, as telling the procurement panel.
"All hurdles and bottlenecks in the procurement process should be addressed expeditiously so that the pace of acquisition is not stymied."
Among other business cleared by the panel, India will issue a request for proposals to supply six submarines, added the source, who was not authorized to comment on the record and did not elaborate.
Spike is a man-portable 'fire and forget' anti-tank missile that locks on to targets before shooting. It is produced by Israel's Rafael Advanced Defense Systems, which declined to comment.
It beat out the rival U.S. Javelin weapons system, built by Lockheed Martin Corp and Raytheon Co, that Defense Secretary Chuck Hagel had pitched during Modi's visit to Washington at the end of September.
Senior U.S. officials had said they were still discussing the Javelin order as part of a broader push to deepen defense industry ties with India by increasing the share of production done in the country.