Rafael refused to a complete ToT of the SPIKE as per the provisions of the Make in India initiative

The growing India-Israel bonhomie is all too well known. A critical part of the ties is India shopping military muscle in Israel. But, as Sonia Sarkar finds out, all’s not well despite eagerness on both sides to do business

A hundred years have passed since Indian soldiers laid down their lives to liberate the Israeli city of Haifa from the Ottoman army. A century later, it is India that looks up to the military prowess of Israel. The Narendra Modi-led government wants more and more Israeli defence companies to open shop in India and the latter have embraced the opportunity with gusto. In 2017, Israel signed a $2 billion deal with India to supply advanced missile defence systems - the biggest such deal in the history of Israel's defence industries.

Israeli defence companies such as Israel Aerospace Industries (IAI) Limited, Elbit Systems, Aeronautics Limited and Rafael Advanced Defence Systems Limited - that specialise in manufacturing UAVs (unmanned aerial vehicles), radars, avionics and other defence equipment - have entered into joint ventures with private companies in India.

According to Thailand-based Asia-Pacific defence expert Jon Grevatt, it is a great fit. Israel is good at producing and developing missile, navigation and combat systems, unmanned surveillance and radar systems, all of which cater to India's military needs. He adds, "Israeli military technologies match well with India's strategic needs."

Potential adversaries, Grevatt points out, surround both countries, a reason why they see themselves as military and strategic partners.

Modi and his Israeli counterpart, Benjamin Netanyahu, have urged their respective defence ministries to involve public and private sectors to create the basis for viable, sustainable and long-term co-operation in defence. Last year, the I4F - India Israel Industrial R&D and Technological Innovation Fund - was launched.

Under the joint venture agreement, Israeli and Indian companies have been setting up manufacturing plants, working on the transfer of military technologies and developing strategic applications ( see box).

And while the ink is yet to dry on many of these, what is definitely not new is the exchange - Israel has been supplying complete systems such as radar, air defence, drones and air-to-surface missiles to India for two decades now.

According to Stockholm International Peace Research Institute (Sipri) estimates, India accounted for 49 per cent of Israel's arms exports between 2013 and 2017. Sipri is an independent global security institute. IAI, Elbit and Rafael have increasingly gotten involved in supplying components for weapon systems developed in India - radar for the HAL manufactured light combat aircraft, Tejas, battlefield management system for the Arjun tank.

Pieter Wezeman, senior researcher, Arms and Military Expenditure Programme at Sipri, feels the next step is co-operative development between the two nations but there are hiccups galore. "Considering India's own unimpressive record in developing advanced arms, it is not in a position to be an equal partner in technological terms with Israel. The relationship will remain one in which the Israeli arms industry will supply technology and India, money. A recent example of such a project is the ongoing development of the medium-range surface-to-air-missile air defence system, based on the Israeli IAI and Rafael Barak-8 system."

Politically, for years, India has been a critic of Israel and supported the Palestinian cause, while maintaining good terms with the Arab world. It was only after the Cold War ended that India established full-fledged diplomatic relations with Israel.

During the 1999 Kargil war, Israel provided India with mortar ammunition and surveillance drones along with intelligence inputs. A 2013 book titled 1971 by Srinath Raghavan, however, reveals that India also received arms from Tel Aviv when it was preparing to go to war with Pakistan in 1971.

Arms supply to India picked up after 2000, when Israel, pressured by the US, stopped exporting to China. In 2003, Ariel Sharon became the first Israeli prime minister to visit India and the Delhi Statement on Friendship and Cooperation was signed. During the same visit, the deputy prime minister of Israel, Yosef Lapid, observed that India and Israel had the "closest ties in defence" and Israel was the "second largest supplier of weapons to India". Russia was the largest supplier then.

The current BJP government has taken business relations between the two nations to a new level. In a deviation from the past, India abstained from voting against Israel at the UN Human Rights Council in 2015, when a resolution was passed against it for "alleged war crimes" in Gaza. In 2017, Narendra Modi was the first Indian prime minister to visit Israel but he didn't visit Ramallah, the seat of Palestinian authority. (He went later, on a separate visit.) Once again, last year India maintained a stoic silence for over a month before voting in favour of a UN General Assembly resolution that rejected US recognition of Jerusalem as the capital of Israel. The Indian PM has also urged Israeli defence firms to take advantage of the "liberalised" foreign direct investment (FDI) regime.

But Israeli companies, it seems, want more. Amit Cowshish, an Indian defence expert, puts things in context. "The Israeli companies have not invested much in India because of the virtual cap of 49 per cent on FDI that denies a decisive say to the investor in the management of the investor company. The total foreign direct investment in defence since 2014 has been just about Rs 1 crore," he says.

Bureaucratic issues, apparently, remain a deterrent for investing companies. "The fact that the ministry of defence has been slow in awarding big time contracts to the private sector may also be a discouraging factor, because it indicates that the business potential is not really getting converted into actual business for the industry," says Cowshish, who used to be financial adviser (acquisition) at the ministry of defence.

The recent termination of the $500 million deal for "Spike" anti-tank missiles and missile-launchers from Rafael is not good news either, nor so the series of flip-flops that punctuated the negotiations. For example, a few days before Netanyahu's January visit to India, it was reported that the deal had fallen through. But when the Israeli PM was in Delhi, he announced that the deal had been revived. A recent report, however, confirms that the defence ministry decided to retract the request as Rafael refused to a complete transfer of technology as per the provisions of the Make in India initiative.

"Arms procurement in India appears to be prone to delays in final decisions, confusing decisions, confusing government statements, delays in contract and deliveries, even cancellations and restarts of cancelled plans," says Wezeman of Sipri. He continues, "Such flip-flops erode India's credibility both as a responsible buyer and as a promising destination for investment."

However, it is not as if Israel is the lone option for India. Wezeman talks about how Israel encounters heavy competition from other arms industries. "India started to look at the US as an arms supplier about a decade ago. Plus, India is the most important export market for the Russian arms industry since the 1960s," he says.

But Israeli military equipment is highly competitive in the world market and stands out, argues defence expert Grevatt. "Israel doesn't make fighter aircraft or submarines or surface combatants as does Russia. Israel makes the systems - their products are quite niche and the world's best. Israeli systems can be integrated in Russian or US platforms. Israel is an experienced defence exporter and exports products all over the world," he adds.

International defence experts draw attention to yet another angle to India's military bonhomie with Israel. They say it is not all for the sake of strengthening the country's defence sector but also to serve the Modi regime's own interest. Maren Mantovani, member of the International Secretariat of the BDS National Committee (it leads the BDS movement for Palestinian human rights), says, "India's Right-wing government uses the weapons imported from Israel as an instrument of repression and surveillance on its own people. The imports have heavily increased under the Modi regime and are hugely shifting towards small arms, drones, surveillance balloons and weaponry that is mainly deployed in internal conflicts."