India cancels $500m deal with Israel, opts for $72m worth of missiles instead

India has pulled out of a half a billion dollar anti-tank missile deal ahead of an official visit to Delhi by Israeli Prime Minister Benjamin Netanyahu, according to Haaretz.

A spokesperson for production company Rafael Advanced Defence Systems confirmed yesterday that the company had received official notice from the Indian government that the deal for anti-tank weapons, also known as Spike missiles had been terminated.

“It should be stressed that the cancellation was done before the contract was signed, and despite the fact that the company fulfilled all its requirements. Rafael was disappointed to receive the decision,” the company said.

In November, David Keynan, vice chairman of the Federation of Indo-Israeli Chambers of Commerce, warned that cancelling the deal could have serious repercussions on the entire market.

“It is a very noteworthy deal. It will have an impact not only on defence trade, but on all trade,” Keynan said.

According to India media, the decision to cancel the Spike deal was to facilitate the development of India’s own anti-tank guided missile, which is currently under production.

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However, India mitigated the refusal by agreeing to purchase 131 Barak surface-to-air missiles from Rafael for $70 million. The weapons are designed to be used as a ship-borne anti-missile defence system against anti-ship missiles.

India has longstanding tensions with other regional powers, most notably Pakistan and China, and according to the Institute of Strategic Studies, boasts the second largest army in the world, ahead of the United States.

Last July, Indian Prime Minister Narendra Modi made history by being the first state leader to take an official tour of Israel. Israeli Prime Minister Benjamin Netanyahu is set to return to the visit, leading a group of businessmen and diplomatic dignitaries to Delhi later this month.

Representatives from Rafael Defence Systems are expected to be among the delegation.

Israel has become a major defence supplier to India, selling an average of $1 billion of military equipment each year.

The two countries have strengthened ties in recent months, taking part in the first joint military drill in November and easing visa restrictions last month. India has also announced that it has reduced its investment in Iran in favour of Israel.

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