IAI loses out to Raytheon on Indian ISTAR deal

IAI Elta

Israel Aerospace's ELTA unit had been one of the favorites to win the $1 billion intelligence, surveillance, target acquisition, and reconnaissance aircraft contract.

India has handed a major blow to Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) unit ELTA, which had been hoping to win a $1 billion deal to sell two ISTAR (intelligence, surveillance, target acquisition, and reconnaissance) aircraft.

IAI had been strong in the running to win the deal after receiving a restricted global request for information from the US government for the acquisition of ISTAR-capable aircraft in 2013. Thales of France, Raytheon and Boeing of the US, and the UK's BAE Systems also received the request. The Indian government has now awarded the procurement to Raytheon.

Defense industry sources had seen IAI as having a major chance of winning the deal due to IAI's strong presence in India. In recent years, IAI has won three major deals from the Indian government: Barak 8 naval defense missiles in two deals worth $2 billion last April and three Phalcon AWACS aircraft worth $1.1 billion in a deal completed in 2010.

Indian Prime Minister Narendra Modi's groundbreaking visit to Israel in July, several months after the Barak 8 deal was signed, was seen as a further sign that the two Asian powers were forming much closer defense ties. Modi had then declared the opening of a path of partnership with Israel and that India places great importance on Israel's advanced technology.

ELTA had been offering India an ISTAR aircraft similar to the Israel Air Force's Nachshon, which is based on a Gulfstream 550 platform - the executive jet produced in the US but adapted for ISTAR missions by ELTA. In addition to the Israel Air Force, ELTA has also sold such aircraft to Singapore, according to foreign media reports.

According to "US Defense News," India officially asked the Pentagon to go ahead with the Raytheon procurement in early October following the visit of US Defense Secretary Jim Mattis to New Delhi. The visit was designed to strengthen military cooperation between India and the US. In 2016, Barack Obama's final year in office, the US granted India the status of "major defense partner" in an effort to iron out bureaucratic obstacles to future US-India defense deals.

Published by Globes [online], Israel business news - www.globes-online.com - on October 18, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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