Israeli Industry Must Make a Passage to India

India and Israel have much in common. Closer relations would benefit both countries enormously, both diplomatically and economically.

Moshe Arens
Moshe Arens
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Rafael's Spike missiles
Rafael's Spike missilesCredit: Rafael Advanced Defense Systems
Moshe Arens
Moshe Arens

India, the world’s largest democracy, has at present the tenth-largest economy. It will, no doubt, surpass the economies of the European nations in a few years and rank among the world’s four largest economies, together with the United States, China and Japan. It is a friend of the State of Israel.

It shares with Israel the values and ideals of democratic government. Like Israel, it has a substantial Muslim minority among its population. Since its partition in 1947, it has fought three wars with its neighbor, Pakistan, and to this day faces a security threat from that direction. Terrorist acts have been an ongoing problem in India. These challenges are similar in nature to the challenges facing Israel, and make for common ground in the increasingly close relation between India and Israel.

Bharatiya Janata’s sweeping victory in this year’s election is a precursor of further improvements in relations between the two countries. New Indian Prime Minister Narendra Modi, a known friend of Israel, has expressed interest in building closer ties between the two countries.

This development represents a great opportunity for Israel on the diplomatic and economic fronts. Unlike representatives of the European Union in Brussels, who frequently criticize Israel and, now and then, suggest the use of economic sanctions against it, India is not likely to participate in this kind of Israel-bashing. In the economic sphere, the huge Indian market offers unprecedented opportunities for the Israeli economy. Israeli agricultural and water technology has already made its mark in India. This activity will surely increase in the years to come.

It is about a six-hour direct flight from Tel Aviv to Delhi, and one can expect that to become a well-traveled route in both directions in the years to come. India should be a major objective for Israeli politicians and industrialists. There is a great future out there.

The greatest potential there for Israel in the near future is India’s defense market. The Indian defense budget for this year was about $36 billion, and India is interested in cooperating with defense industries in other countries to upgrade the level of its armed forces. At present, India’s defense industry is considered to be years away from being ready to meet the country’s weapons orders. Israel’s defense industries could not wish for a better opportunity, and hopefully their management is already busy making the most of this opportunity.

One Israeli defense company that has not been caught napping is Rafael Advanced Defense Systems, which has just concluded the $500 million sale of its Spike tactical missile to India, beating the U.S.-made Javelin to secure the order. It is surely an indication of more defense sales to come.

The major beneficiary of this opportunity offered by India’s defense needs could be Israel Aerospace Industries. India is in the market for an over-$10 billion procurement of a modern fighter aircraft. Dassault Aviation, the French aircraft manufacturer, has for several years been attempting to sell its Rafale fighter to India. The marketing effort included a visit by French President François Hollande in February 2013, but so far to no avail. The IAI Lavi fighter is potentially a more capable aircraft than the Rafale, and might, through cooperation with the Indian defense industry, represent an opportunity for IAI to compete in this market.

Does the IAI management dare to grasp this opportunity? Has IAI recovered from the near-fatal blow it received 27 years ago when the Lavi project was canceled, just as it was entering its flight test phase of development? Manned aircraft was the core technology of IAI, and for years it was at the forefront of this technology. In the intervening years, this technology has taken a backseat to other research and development projects within the company, to the detriment of IAI’s development and balance sheet. Even the jet trainer procured by the Israel Air Force in 2012 was not purchased from IAI but Alenia Aermacchi in Italy.

So here is a challenge for Israel’s largest defense company. Its objective should be India. Will it get another chance?

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