India has decided to scrap a half-billion dollar deal to purchase Israeli anti-tank missile technology in favor of a domestically-produced version, Indian media outlets reported Monday, in a major blow to Israel which sells billions of dollars worth of arms and defense weaponry to India each year.
India had sealed the deal to buy Israel’s Spike anti-tank guided missiles from Rafael Advanced Defense Systems in May 2016, with reports at the time saying India was set to purchase 8,000 Spike missiles and 300 launchers in a deal worth some $500 million.
Joint production on the technology between Rafael and Indian firm Kalyani Strategic Systems had been announced in August, during a historic visit to Israel by Indian Prime Minister Narendra Modi.
But Indian media outlets cited sources as saying that the country’s defense ministry had opted to invest in developing a “man-portable” anti-tank guided missile through its own Defense Research and Development Organization instead.
Rafael did not immediately respond to a request for comment on the report.
The decision, while a blow to bilateral defense ties between Israel and India, is in line with Modi’s ‘Make In India’ strategy to draw in more foreign investment and encourage manufacturers to do business in the world’s fastest growing major economy.
In August, Israel and India inked an estimated $2 billion in defense deals which included establishing a number of joint ventures between Israel Aerospace Industries, Rafael, and India’s Kalyani Strategic Systems (KSSL) on joint development, manufacturing, and marketing of precise ammunition systems as well as the establishment of a maintenance center for selected advanced air defense systems in Hyderabad, India.