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Rafael lines up $1.8 billion India deal

March 29, 2011 at 1:43 PM   |   Comments

TEL AVIV, Israel, March 29 (UPI) -- Israel's Rafael Advanced Defense Systems is expected to secure an anti-tank missile order worth $1 billion from the Indian military, consolidating the Jewish state as a key arms supplier amid a major armed forces upgrade.

Rafael, which posted a record net profit of $178.6 million in 2010, is also in line to secure arms sales to South Korea worth $500 million a year, The Jerusalem Post reported.

These underline a new focus by Israel's high-tech defense industry on the Asian market, spurred in part in response to China's military buildup.

According to Defense News, a U.S. weekly, Rafael will sell the Indian army 8,356 Spike anti-tank missiles with 321 launchers, 15 training simulators and associated equipment.

Rafael was the only bidder in the Indian tender unveiled last June and the Indian army had to obtain a special government permit to sign a deal with the sole bidder.

Defense News said technology transfer was also a potential obstacle.

It isn't clear whether companies that didn't make bids -- General Dynamics Corp. and the Raytheon Co. of the United States, Rosoboronexport of Russia and Europe's MBDA -- had refused to share technology.

The Indians intend to mount the precision-guided Spikes on Russian-built combat vehicles. The Israeli missiles reportedly met all the Indians' requirements -- a range of 1.5 miles in day or night conditions, a 90 percent accuracy rate and include a 3G active-passive fire-and-forget guidance system.

Rafael, which a decade ago was a loss-maker, announced financial results March 23, listing 2010 sales at $1.97 billion and an orders backlog of $3.56 billion at year-end.

Rafael cited a slowdown in demand for defense products in key world markets as defense budgets were adjusted following the 2008 financial meltdown.

But Chief Financial Officer David Vaish told the Globes, an Israeli business daily: "We're still talking about a very handsome orders backlog, which amounts to almost two years of sales. This is not a crisis."

Israel depends on military exports to keep its defense industry going to supply much of its own military needs.

Rafael is pinning export hopes on its newly unveiled Trophy missile defense system for tanks, currently being fitted to the Israeli army's Merkava tanks and armored personnel carriers.

The South Koreans are set to deploy the long-range version of Rafael's Spike missile in 2012 on Yeonpyeong Island, which was shell by North Korea in November.

"The military is hoping to purchase some 50 Spike missiles equipped with a global positioning system," a government source in Seoul told the Yonhap News Agency in February.

The Iron Dome anti-missile system against short-range rockets, which the Israeli military deployed on the border with the Palestinian-held Gaza Strip this week, is seen as another seller.

The Indians are keen on acquiring the Arrow-2 anti-ballistic missile system built by Israel Aerospace Industries and the Boeing Co. that has been used in Israel since 2000 to counter Iran's Shehab-3b missiles.

But any deal on that would require U.S. approval since the Americans share in the financing, development, production and assembly of the system.

The Arrow hasn't been cleared for foreign sales but when it is India, one of the Israeli defense industry's largest customers, is likely to be top of the list.

Among recent big-ticket Israel arms sales to India are:

-- Rafael's $1 billion contract in 2009 to provide 18 Spyder surface-to-air missile systems by 2012.

-- IAI's 2009 $1.1 billion deal for advanced Barak-8 tactical air-defense system, primarily for use aboard warships.

-- India launched an IAI-built RISAT-2 all-weather spy satellite from the Sriharikota launch site in southern Andhra Pradesh state, forging strategic cooperation in space projects between the two allies.

-- IAI sold the Indian air force three Phalcon early warning aircraft worth $1.1 billion in 2004.

All told, Israeli companies have sold India weapons systems and other military equipment worth more than $10 billion over the last decade, making Israel New Delhi's second largest supplier after Russia.

Hindu-dominated India established diplomatic relations with Israel in 1992 following the end of the Cold War, during which New Delhi supported the Arab cause.

But it wasn't until the Hindu Bjaratiya Janata Party came to power in 1998 that the defense partnership was really forged.

© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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