Representatives of over 20 Israeli companies involved in the development and production program for the Merkava tank and Namer armored personnel carrier today finished the first seminar ever conducted in India. Dozens of Indian companies attended the seminar. The Ministry of Defense SIBAT - Ministry of Defense International Defense Cooperation Authority sponsored the seminar, in view of the emerging needs of Indian industry in order to prepare for the large-scale procurement of armored vehicles by the Indian army expected in the coming years.
The growing security ties between India and Israel have been reflected in recent years by major Indian procurement of Gil anti-tank missiles produced by Rafael Advanced Defense Systems Ltd., upgrades of Indian tanks by Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), joint development with Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) of Barak 8 missiles, and more. The Ministry of Defense, Manufacturers Association of Israel, and the Indian Industries Association are now trying to extend the ties even further and facilitate cooperation between Israeli companies and companies involved in future procurement of armored vehicles by the Indian army. The aim is to have Israeli systems developed in industries related to the Merkava in Indian armored vehicles. "We want to make connections between companies," Ministry of Defense Tank Administration Commander Brig. Gen. Baruch Matzliah told "Globes" today. "We have technology, and the Indians are interested in it, in addition to the need to create new jobs in the country. It appears that there is fertile ground for cooperation in the coming years." Two years ago, Elbit Systems signed an agreement to upgrade 1,000 T-72 tanks used by the Indian army. The deal was believed to total hundreds of millions of dollars. Elbit Systems will install advanced fire control systems developed for the IDF's Merkava in these T-72s.
In addition to upgrading T-72s, India is manufacturing another Russian tank, the T-90, in its territory under special license. The Ministry of Defense now believes that Israeli companies can also be included in this program through the installing of systems they have developed in tanks produced for the Indian army.
Representatives of Imco Industries Ltd. (TASE: IMCO), Nir-Or Israel Electronics, Urdan Metal & Casting Industries, Orlite Industries, C. Mer Industries Ltd. (TASE: CMER), Beth-El Zikhron Yaaqov Industries, Magam Safety, Bental Industries, and other companies manufacturing components for the Merkava and Namer took part in the seminar.
200 Israeli companies with a total of 10,000 employees throughout Israel are involved in these enterprises. Aggregate exports by these companies are estimated at $700 million.
In addition to production of the Merkava Mark IV and the Namer, the Tank Administration is also spearheading the development of the Eitan, a new wheeled Israeli APC currently under consideration. If and when it is decided to procure it, the Ministry of Defense's orders from these companies may increase.
The defense establishment is having trouble estimating the potential value of possible cooperative ventures involving Israeli and Indian companies aimed at the Indian armored vehicles procurement program. In any case, the Indian hosts have already explained the prevailing business environment in India to their Israeli guests. Every deal signed with India must include the transfer of Israeli know-how to India, and the production lines must be in the country. "In any case, we will take care to keep some of the production in Israel - and of course we will keep special know-how in this area," Matzliah said.
Comprehensive surveys
In recent days, representatives of Israeli industries and the defense establishment received a comprehensive survey from senior Indian army officers of its buildup of forces for the coming year and the defense challenges it faces, especially on the country's borders with Pakistan and China. "For a long time, our relations with India have been more than just buyer and seller," SIBAT head Brigadier General (res.) Michel Ben-Baruch says. "It's a partnership, a common road, it’s a real friendship."
The industries involved in the Merkava and Namer program have been exporting components and systems developed for the Israeli tanks and APCs for years. The Ministry of Defense has previously claimed that every shekel invested in the Merkava program is returned fourfold to the Israeli economy through these exports. At the same time, for the first time, the Ministry of Defense is referring a mass of companies in this area to a target growth market with potential for deals amounting to billions of dollars. "India is Israel's biggest defense export destination. There is a significant business opportunity here to expand the volume of our activity," says C. Mer Industries defense and technology division general manager and former SIBAT head Yaron Livnat. "Most of us are familiar with the Indian market, and we're confident that we have a great deal to offer them in cooperation with local companies."
Published by Globes [online], Israel business news - www.globes-online.com - on November 30, 2016
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