India moves to cancel $500m. missile deal with Israeli company

Rafael Advanced Defense Systems: We are not aware of this decision

Israel and India marked 25 years of diplomatic ties in 2017. (photo credit: ANNA AHRONHEIM)
Israel and India marked 25 years of diplomatic ties in 2017.
(photo credit: ANNA AHRONHEIM)
The Indian Ministry of Defense has reportedly moved to cancel a missile deal with Israel worth half a billion dollars, in what could be a major blow to otherwise flourishing Israeli-Indian ties.
The contract with Rafael Advanced Defense Systems – first discussed in 2014 – allowed for India to purchase Spike antitank guided missiles. Instead, the Indian government has asked the country’s Defense Research and Development Organization (DRDO) to nix the deal and develop its own “home-grown” anti-tank missile, in an attempt to build up its own defense industry.
Indian Prime Minister Narendra Modi made a historic first visit to Jerusalem in July to highlight the growing bilateral relationship between the two countries, and to cement economic ties that included defense contracts.
Prime Minister Benjamin Netanyahu is scheduled to travel to India on January 14 for a three-day visit to meet with Modi. It is unclear if the canceled deal will affect their planned meeting.
Indian defense officials told the Indian Express that DRDO was “confident” about its own in-house missiles. It added that within three to four years, “it won’t also need any transfer of technology.” India’s army, however, expressed concerns over canceling the deal.
Conflicting reports emerged on Monday, as Rafael said the deal had yet to be canceled.
Israelis welcome Narendra Modi to Israel in Hindi (credit: Israel in India twitter)
“Rafael has not been officially informed of any change in the decision to purchase Spike missiles,” Rafael’s spokesman, Ishai David, told The Jerusalem Post, adding that he could not confirm the reports. “This activity will continue as planned.”
India closed the deal to purchase the Spike missile in 2016 and selected Israel’s government-owned Rafael defense contractor over a rival US offer of Javelin missiles that Washington had lobbied hard to win. According to reports at the time, India was slated to buy at least 8,000 Spike missiles and more than 300 launchers. Rafael had reportedly opened a missile manufacturing plant in India along with an Indian partner.
The deal was expected to be finalized soon, after years of negotiations. The Indian Defense Ministry did not respond to media inquiries prior to press time.
Given that India has yet to fully master the antimissile technology, it is likely that other factors are more responsible for the cancellation.
“Past Indian officials were convicted of accepting Israeli bribes that jeopardized the contracts,” said INSS defense industry analyst Yiftah Shapir, such as when Israel Military Industries was banned from India in 2012 for a few years. “In the past, it had less to do with actual corruption – although such deals never go through without some degree of corruption anywhere in the world. The [accusations] may have more to do with internal Indian politics because there are many in India who object very much to India’s contacts with Israel.”
International competition could also have played a role in nixing the deal.
“Maybe they got a better deal from Russia,” Shapir suggested.
Cancellation of the deal is a blow to Israeli-Indian defense ties and comes just months after Israel Aerospace Industries signed a $630 million deal with the Indian state-owned aerospace and defense company Bharat Electronics Limited to provide India with the naval version of the aerial defense system, Barak 8, for four navy ships.
India has become one of Israel’s largest buyers of military hardware, with annual defense deals worth over $1b.
“Usually, all the [defense] deals between Israel and India included some technology transfer, which India could not get anywhere else in Europe or America,” said Shapir. “As long as we can supply better technology on better terms, India will welcome it.” He added that relations could deteriorate again, due to India’s strong ties to Iran and much of the Arab world.