Reports in the Indian media Monday said that the country was set to cancel a major arms deal with Israel. In the deal, India was to have purchased from Israeli defense technology firm Rafael 8,000 SPIKE anti-tank missiles and 300 launchers for the missiles. The deal was said to have been worth about $550 million. According to the reports, the Indian government is canceling the deal in order to boost the local arms industry.
Channel 13 quoted a senior Indian source familiar with the deal as saying that the deal would have entailed Rafael’s setting up a factory in India for production. Pressure has been great by politicians in the opposition to nix the deal, and in the end the government decided to acquiesce to that pressure and use local firms for production. Israeli sources told Channel 13 that if the reports are correct, the deal’s cancelation could negatively impact an upcoming trip by Prime Minister Binyamin Netanyahu to India, set for January.
The decision was made by the Indian Defense Ministry, and the leaders of the army are not pleased. While army leaders are in favor of developing the local military industry, this was the wrong deal to choose as a springboard for local production, and it is likely to be many years before any missiles are delivered — while the Rafael deal would have produced missiles far more quickly and efficiently, the Indian source said.
A spokesperson for Rafael said in a statement that it was not aware of any changes in the deal. “Rafael’s SPIKE system is in use in 26 countries, and was chosen by India after a long process of decision making, after the system proved its capabilities in a large number of scenarios.” The statement added that Rafael had already established the infrastructure for local production with an Indian firm, and had begun transferring intellectual property to India “in order to enable the products to bear the title ‘Made in India,’ which is part of the conditions of the deal. At this point, we are continuing as planned.”
It should be noted that the SPIKE deal is just one of numerous deals Rafael has with India. In March, Rafael announced that it had entered into a $10-billion partnership agreement with India defense giant Reliance. In a statement, the companies said that Rafael already supplies air defense systems to the Indian Air Force that are used for reconnaissance, communication and intelligence purposes. “Rafael is also willing to offer solutions through the Joint Venture even for the ongoing ‘Buy Global’ programs where it is currently competing, in line with ‘Make in India’ initiatives of the Indian government,” Reliance added.