Make in India will boost defence ties with Israel
Israeli Defence Minister Moshe Ya'alon's strong commitment to Prime Minister Narendra Modi's flagship Make in India programme marks the next phase in bilateral ties. India and Israel already cooperate closely in the defence sector but in the coming years, a definitive transition from a transactional relationship to one that is more organic is expected. Currently, Israel is one of India's top three defence suppliers while India is one of Israel's biggest customers. Israel supplies a lot of critical military hardware to India, such as the airborne early warning system called Phalcon, which serves as the eyes of the Indian Air Force in the skies. At the Aero India show in Bangalore, where Mr Ya'alon inaugurated the Israeli pavilion, deals worth two billion dollars have reportedly been signed.
Going forward, there will be a shift from India merely purchasing Israeli defence systems to the two countries jointly producing the hardware. This will include transfer of technology and more production in India. While all of India's friends and partners — the US, the EU, France, Germany, Japan, Singapore — have offered to support the Make in India programme, Israel's contribution in defence manufacturing is expected to be on a different scale. This is partly because Israel already has a lead but more importantly, because it is much more willing to openly and easily share technology with India than others.
A good example of how such collaborations will play out is the joint venture project that was announced between India's Kalyani Group and Israel's Rafael Advanced Defense Systems ltd on Thursday. The former will hold 51 per cent of the company while the latter will control 49 per cent. Notably, the cap for foreign direct investment in defence was only recently increased from 26 per cent to 49 per cent to attract more FDI. This has been one of the biggest reforms introduced by the Modi Government in the past nine months and clearly, it is now paying off. While the state-owned Rafael, best known as the company that built the Iron Dome, is one of Israel's big three defence manufacturers, Kalyani Group is a multi-billion dollar conglomerate that works across critical sectors. A joint venture between the two has tremendous potential for the peoples of both countries.
However, Kalyani-Rafael deal is hardly the first such venture as all three of Israel's top defence firms have ties with Indian firms. For example, Israel Aerospace Industries and Tata Group set up a joint venture project back in 2009 to manufacture unmanned aerial vehicles, homeland security systems, and electronic warfare systems. Israel's third big player, Elbit Systems also has similar tie-ups Hindustan Aircraft and Bharat Electronics. In other words, the shift towards co-production and joint-manufacturing has been in the works for a while but the the Make in India programme helps make a definitive movement towards greater collaboration by improving the overall business environment in India.