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Israel's IMI banned from Indian contracts

Aug. 10, 2012 at 9:13 AM   |   Comments

NEW DELHI, Aug. 10 (UPI) -- India's government in March banned several foreign defense contractors from bidding on contracts.

The restrictions are to last a decade

India is a key export market for Israeli defense firms, including Israel Military Industries, Israel Aerospace Industries, Rafael Advanced Defense Systems and Elbit Systems.

Defense imports are critical for India's defense establishment, which, lacking a domestic military industrial base, remains dependent on foreign imports for roughly 70 percent of its military purchases.

The ban, which includes IMI, has attracted critics, as shortsighted.

"We can expect the indigenous manufacture of ammunition to be slow, and we will have to import more artillery ammunition in the future as a result of the ban," retired Brigadier Gen. Rahul Bhonsle with New Delhi's Sasia Security-risks.com Pvt Ltd. told The Times of India.

"Many of the banned firms are the owners of proprietary technologies. These technologies may not be available with other contractors, so the country's defense establishment is set to lose access to such technology."

New Delhi's Society for the Study of Peace and Conflict Vice President Deba Ranjan Mohanty added, "This is a lose-lose situation for both the companies banned from bidding contracts and the country, which is heavily dependent on foreign countries for purchasing arms and defense technologies."

The situation "is not a very happy one," she said.

"The blacklisting act was thus necessary to make the system more transparent," Moanty said. "The defense firms will be more careful and not indulge in unfair practices as a result."

Israeli arms sale to India are longstanding -- in the 2001-06 period India purchased arms worth nearly $15 billion from Israel.

In March, India announced it had blacklisted the six weapons firms, including IMI, in connection with an alleged bribery scandal in 2009.

"We are surprised by the Indian Defense ministry's decision because the process of hearings over the intended sanctions against the company has not been completed," IMI spokesman Josh Hantman said when the ban was imposed.

Hantman added that the decision was premature and unexpected, "especially in light of the fact that IMI had good reasons to oppose this measure. The Israeli Defense ministry will consult with Israel Military Industries about how to respond to the Indian Defense Ministry decision."

The fiscal stakes are immense, as India intends to spend upward of $100 billion in acquiring weapon systems and platforms over the next decade.

Among those nations seeking to increase their market share is the United States.

U.S. Deputy Secretary of Defense Ashton Carter recently said, "As a country committed to enduring peace and security in the Asia-Pacific region, India deserves the best military equipment available ... India is a top priority in our export considerations.

"Practically, we want to be India's highest-quality and most trusted long-term supplier of technology ... We trust India and know India is not a re-exporter or exploiter of our technologies."

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