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Collaboration with Israel in Defence Sector under FDI

  • 27 Jul 2020
  • 9 min read

Why in News

India has collaborated with the Israeli defence companies under the new liberalised Foreign Direct Investment (FDI) regime in defence manufacturing.

  • Earlier, the government has increased the limit for FDI in defence through the automatic route from 49% to 74%.
  • FDI is an investment made by a firm or individual in one country into business interests located in another country.

Key Points

  • Context: Recently, the Defence Ministry has given emergency powers to the Armed Forces to procure weapons systems up to Rs. 300 crore on an urgent basis without any further clearances to cut short the procurement cycle.

India-Israel Defence Cooperation

  • Description: The strong bilateral ties of India and Israel are driven by their respective national interests—i.e., India’s long-sought goals of military modernisation, and Israel’s comparative advantage in commercialising its arms industries.
    • The ambit of defence cooperation has widened to include other domains like space, counter-terrorism, and cyber security and intelligence sharing besides Israeli arms sales to India.
    • India was the largest arms customer of Israel in 2017 with sales worth 715 million USD.
    • According to the Stockholm International Peace Research Institute (SIPRI) report, Israel is the third largest supplier of defence items to India after Russia and the USA, the first and second respectively.
  • Historical Ties: The strategic cooperation between the two countries began during the Sino-India War of 1962.
    • In 1965, Israel supplied M-58 160-mm mortar ammunition to India in the war against Pakistan.
    • It was one of the few countries that chose not to condemn India’s Pokhran nuclear tests in 1998.
    • It continued its arms trade with India even after the sanctions and international isolation after the nuclear tests.
  • Significance:
    • Patrolling and Surveillance: The Israeli imports eases the operational ability of armed forces in wartime. For instance, the missile defence systems, and ammunition played a crucial role in controlling the escalation between India and Pakistan post-Balakot air strikes.
    • Make in India: The export-oriented Israeli defence industry and its openness to establishing joint ventures complement both ‘Make in India’ and ‘Make with India’ in defence.
    • Trusted Supplier: Israel has always been a ‘no-questions-asked supplier’, i.e., it transfers even its most advanced technology without placing limits to its use.
      • Its credibility was reinforced during the Kargil War of 1999 when it supplied the Indian Air Force (IAF) with the Unmanned Aerial Vehicle (UAV) ‘Searcher’ and surveillance systems for Jaguar and Mirage squadrons.
      • Similar weapons were used in the Balakot strike in February 2019.
    • Ready to Use Technology: India suffers from many constraints in defence production and acquisition including lack of technical expertise, lack of manufacturing infrastructure, inadequate funding and project delays. Israel fills these shortcomings by supplying ready-to-use critical technologies, even on short notices.
  • Challenges:
    • Influence of USA: Some of the Israeli technologies utilise USA components because of which the USA has veto powers over the sale of those technologies. Hence, it may cause hurdles in transportation of technologies.
    • Cold War Politics: The potential of India-Israel ties have been sacrificed on the altar of Cold War politics. Factors like Arab–Israeli conflict, Iran-Israel conflict, constant interference of countries like Russia and USA in such issues and overall relationship of India with these countries have impacted the ties with Israel.
    • Non Alignment: India’s commitment to the non-alignment causes freezing relations with Israel that were increasingly seen as leaning towards the Western bloc. India must strategically balance its relationship with Israel on conflict issues.
    • Dependence for Energy Security: India’s dependence on Arab states for oil imports led to a pro-Arab tilt in its West Asia Policy, which has further constrained Israel's options in the region.
    • Israel Palestine Conflict: The territorial conflicts of Gaza Strip and West Bank have played an important role in shaping India-Israel relationships.
      • Due to Israel-Palestine peace negotiations (Oslo Accords of 1993) India has started normalising the relationship with Israel.
      • However, as a part of Link West Policy, India has de-hyphenated its relationship with Israel and Palestine in 2018 to treat both the countries mutually independent and exclusive.

Defence Technologies Imported by India

  • Unmanned Aerial Vehicles (UAVs):
    • Searcher: It is a multi-mission tactical UAV for surveillance, target acquisition, artillery adjustment and damage assessment.
    • Hermes 900: In December 2018, Adani Defence and Elbit Systems inaugurated the first India-Israel joint venture in defence at Hyderabad.
      • This facility will manufacture high-technology, cost-effective Hermes 900 to be deployed in all-weather terrains.
    • Heron: It is a medium-altitude long-endurance unmanned air vehicle (UAV) system primarily designed to perform strategic actions .
  • Air Defence Systems:
    • BARAK: The surface-to-air missile can be deployed as a low-range air defence interceptor. In India, the BARAK version is known as BARAK-8 (for naval vessels).
  • Missiles:
    • Spike: These are the 4th generation Anti-Tank Missiles with a range of up to 4km, which can be operated in fire-and-forget mode.
      • These are manufactured by the Rafael Advanced Defence Systems, Israel.
    • Crystal Maze: It is an Indian variant of the air-to-surface missile AGM-142A Popeye – jointly developed by the Israeli-based Rafael and US-based Lockheed Martin.
  • Sensors:
    • Search Track and Guidance Radar (STGR): India imported the STGR radar to make INS Kolkata, INS Shivalik and Kamorta-class frigates compatible for deploying BARAK-8 SAM missiles.
    • Phalcon: This airborne warning and control system (AWACS), is also hailed as Indian Airforce Force’s “eyes in the skies''.
    • Phalcon performs surveillance and intelligence gathering beyond the visual range to warn against the incoming missiles or aircrafts in the airspace.

Way Forward

  • The strategic cooperation between India and Israel carries immense potential and India must harness the technological expertise from Israel to modernise an indigenous defence industry.
  • As the USA sees a major role for India in maintaining the balance of power in the Indo-Pacific more technologies are likely to be transferable in the future. With improving strategic understanding between India and the US these technologies can be flexibly deployed to various wings of the military.
  • Indo-Israel defence cooperation must be up-scaled in terms of Joint Ventures (JV) and Joint Research and Development (RD) which can be a force multiplier to realistically achieve India’s ambition to be a major global power.

Source: TH

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