India Scraps $500 Million Israeli Spike ATGM Missile Deal, Prefers DRDO

The Indian defence ministry has decided to scrap a $500 million deal with Israel to procure Spike Anti-tank Guided Missiles (ATGM) and will ask Defense Research and Development Organization (DRDO) to develop and produce Man-Portable Anti-tank Guided Missile (MPATGM) for the Army.

“DRDO has successfully produced the Nag and Anamika ATGMs. It is confident about providing the Army with an MPATGM of 3rd generation missile technology, at par with Spike, within three to four years. It won’t also need any transfer of technology,” Indian Express quoted unnamed defense ministry sources as saying Monday.

The decision to cancel the deal was based on the consideration that importing a foreign ATGM at this stage would adversely impact the programme for indigenous development of the weapon system by DRDO, the sources said.

Rafael has opened a missile manufacturing plant in India along with its Indian partner Kalyani Strategic Systems in August this year. The deal included 8,000-plus missiles, 300-plus launchers and technology transfer. Further, the deal was likely expanded as the Army aims to equip its 382 infantry battalions and 44 mechanised regiments with new missiles.

The facility, the first in the private sector to manufacture missiles, has plans to start production in few weeks, Baba Kalyani, chairman, Kalyani Group had said in August. Termed as the largest yet FDI in defence, Kalyani holds 51 per cent in the JV while Rafael holds 49 per cent.

The purchase of Spike missiles was approved by India’s Defence Acquisition Council in October 2014 and the Barak-8 purchase proposal was given the go-ahead in a meeting on April 3 this year.

Only Rafael of Israel responded, and Spike missiles underwent trials in 2011-12. The ministry accepted the trial evaluation in 2013 and gave clearance for procuring from a single vendor. The US government later tried to offer the Javelin ATGM with transfer of technology but India chose to go ahead with the Israeli system, the news report stated.

Ministry sources said that trials highlighted a problem with one of the two homing devices in the launcher which led to constitution of a study group. The study group presented its report in August 2014, and the ministry agreed in October 2014 to procure the missiles from Rafael.

Price negotiations between Rafael and the MoD started in March 2015. After the prices were finalised in June 2016, then Defence Minister Manohar Parrikar constituted an experts committee to review the evaluation report and explore the possibility of an indigenous missile system. There was divergence in the views of the DRDO representatives and Army representatives in the experts committee over the case. The matter was eventually resolved earlier this month with Army headquarters agreeing to retract the RFP for ATGM launchers and missiles.