Defense industry pleased with progress on India arms deals

Deals worth $1.5 billion have been held up for several years due to a bribery investigation in India.

"The Times of India" reports that the Defense Acquisitions Council has given the go-ahead for Israeli arms deals with India, which had been delayed by Central Bureau of Investigations (CBI) bribery investigations involving Israeli defense contractors. The paper noted that with the opposition no longer threatening the government it seems to be quietly moving ahead with procurements and projects with Israel.

One deal is for SpyDer low-level air defense missile systems, made by Rafael Advanced Defense Systems Ltd. for the Indian Air Force. The deal should be signed in a few weeks. An unrelated arms deal for the delivery of $300 million worth of equipment, which has also been delayed by the investigation, has also obtained approval in principle.

"The Times of India" said that the Defense Acquisitions Council also approved the deal for new-generation long-range 'Barak' surface-to-air missile (SAM) systems made by Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) for the Indian Navy. India's Cabinet Committee on Security approved the deal in July 2007, which will provide Indian Air Force with an initial nine air defense squadrons. The contract is an extension of the ongoing Defence R&D Organisation (DRDO)-IAI project, cleared in January 2006.

IAI is due to supply India with missile systems, launchers, and unmanned aerial vehicles (UAV) worth $1.5 billion. In October 2006, the CBI began investigating suspicions that bribes were paid to former Indian Minister of Defense George Fernandes and former Chief of the Naval Staff Admiral Sushil Kumar in the sale of Barak sea-to-sea missiles worth a total of $270 million to the Indian Navy. The CBI also looked into arms deals with other countries signed in 1998-2001.

"The Times of India" noted that these projects one again, underline the emergence of Israel as India's second largest defense partner since the 1999 Kargil conflict, with New Delhi armaments worth $8 billion from Tel Aviv.

Israeli defense industry officials are pleased with the thawing of negotiations between the Indian Ministry of Defense and IAI and Rafael. They said that the process involved a great deal of politics, but that there was never any doubt about the technical side of the deals. They added that despite the green light given by the Defense Acquisitions Council, the deals still have to undergo a couple of procedural matters before the final signature.

A senior IAI source said in response to the report that negotiations were continuing to close the contract with the Indian Ministry of Defense. Rafael declined to comment on the report.

Published by Globes [online], Israel business news - - on August 20, 2008

© Copyright of Globes Publisher Itonut (1983) Ltd. 2008

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