"Defense News" reports that India has rejected an Israeli proposal to jointly develop a new version of the Heron unmanned aerial vehicle (UAV), made by Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1). The rejection is an unusual event in Indian-Israeli defense relations. Israeli sources estimate the potential value of the project at several hundred million dollars.
A well-informed Israeli source told "Globes" in response that marketing efforts with foreign countries take time and effort, and that the joint project would probably go ahead, despite the initial rejection. He attributed the rejection to an internal struggle among India's defense officials between those who want to stimulate domestic defense industries, and those who want to play it safe by relying on Israel's experience in UAV development.
"Israel is making a constant marketing effort in India. There is constant urgency to sell the Heron," said the source. "Naturally, there are different perspectives in India about the need for such a project. Such deals are closed overnight. IAI is prepared to invest more time and hopes for success."
"Defense News" quotes a source as saying that the rejection of the joint UAV project reflects new thinking in India's Ministry of Defense to focus on current DRDO projects instead of spending money on new ones. India has been trying for a decade to develop its own advanced UAVs to no avail.
India is one of the biggest markets for the Heron; Israel has sold India scores of the UAV, worth almost $1 billion, in several deals. The Indian Navy, Indian Army, and special forces all operate versions of the Heron. "Defense News" says that India currently operates 60 Herons and that it needs more.
"Defense News" says that IAI and India's Defence Research and Development Organisation (DRDO) submitted the proposal to jointly develop the Heron, but that Ministry of Defense officials said that DRDO should focus on the joint Israeli-Indian mid-range surface-to-air missile (MRSAM) program, a land version of Israel's Barak naval defense missile. The magazine says that the missile problem is behind schedule and has technical problems, including the failure of a prototype in December.
According to "Defense News", the joint missile program began in 2009, and is intended for use by both India and Israel's militaries. IAI is the chief Israeli contractor. The DRDO signed the contract with Israel after an Indian tender for the purchase of a mid-range SAM that would use Indian technology failed. The Indian Air Force wants 18 MRSAM batteries at an estimated cost of $1.2 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on April 24, 2013
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