In Its Biggest Security Deal Ever, Israel to Sell India Missile Defense Systems for $2 Billion

Order, which includes Rafael as subcontractor, is for advanced medium-range surface-to-air missile systems

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The 'Barak 8' missile defense system undergoes testing in 2015.
The 'Barak 8' missile defense system undergoes testing in 2015.Credit: IDF Spokespersons Unit

Israel Aerospace Industries announced the biggest security contract ever for Israel’s defense industry on Thursday, providing India with missile defense systems.

State-owned IAI said it had been awarded contracts totaling almost $2 billion for its advanced medium-range surface-to-air missile systems (MRSAM) to the Indian Army. IAI said it would also supply additional long-range air and missile defense systems (LRSAM) for the first locally produced Indian aircraft carrier.

The deal comes three months before Indian Prime Minister Narendra Modi is due to arrive in Israel for a state visit.

The contract is worth $1.6 billion for IAI, with the rest going to Rafael – another state-owned defense company that will be providing components for the systems. The contract had been the subject of unofficial reports for months, but sources at IAI confirmed all the required approvals from India had now been completed.

“The current contracts represent an enormous expression of confidence by the government of India in IAI’s capabilities and advanced technologies, which are being developed with our local partners as part of the Indian government’s ‘Make in India’ policy,” IAI CEO Joseph Weiss said in a statement.

Modi’s visit, timed to mark the 25th anniversary of joint diplomatic relations, comes at a time when the arms trade between the two countries is growing, with Modi moving ahead on his $250-billion program to modernize the country’s aging military equipment.

The Stockholm International Peace Research Institute says India has emerged as the world’s largest arms importer, accounting for 13% of the world total in 2012-16, compared with just 8% for No. 2 Saudi Arabia.

Israel has become a major supplier to India – by some estimates the third-largest – because of the Israel Defense Forces’ vaunted reputation and the high quality of Israeli products. Another factor, though, is Israel’s willingness to transfer technology and form joint ventures with Indian companies to develop and manufacture high-tech military equipment. That fits in comfortably with Modi’s “Make in India” initiative, too.

Earlier this week, Defense News reported that IAI emerged as the lowest bidder against the French defense contractor Thales for a $500-million contract for 3-D surveillance and tracking radars, which will replace aging Flycatcher radar systems. However, signing the contract may take time as the Indian Defense Ministry pursues a cheaper option, a senior Defense Ministry official said.

In the case of MRSAM – an advanced air and missile defense system that provides protection against a variety of aerial threats – the technology was developed jointly for the Indian Army by IAI and India’s Defense Research and Development Organization, in collaboration with Rafael and IAI’s Elta division. Indian companies such as BEL, L&T and BDL also participated in the project.

In its existing version, MRSAM is operational with the Indian Air Force, Indian Navy and Israel Defense Forces. The system includes an advanced phased-array radar, command and control, mobile launchers and missiles with advanced RF seekers.

Modi’s visit, which will be the first ever by an Indian prime minister to Israel, could yield more arms deals, including a contract for IAI’s Heron TP drone and for Phalcon long-range Airborne Warning and Control System (AWACS), according to India daily The Hindu.

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