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Modi's Missile Dilemma: Why India Keeps Spiking, and Reviving, a Massive Israeli Arms Deal

The on-off Spike missile deal between India and Israel is an ongoing saga – a weaponized, geopolitical soap opera.

Back in 2014, India's state-run Defence Acquisition Council, chaired by the then defence minister, Arun Jaitley, cleared the purchase of 8000 Spike missiles, over 300 launchers, and technology transfer from Israel to Bharat Dynamics Limited (BDL), one of India’s state-owned ammunition and missiles manufacturers.

This $600 million deal to purchase the man portable "fire and forget" Spike missiles, which have a four kilometer range, was hailed as a major milestone in defense cooperation, a "flagship deal that cemented the budding Israeli-Indian security relationship” - a win-win situation for the buyer (India, the world’s largest importer of arms) and the seller (Israel – for whom India would become one of its largest clients).

In bagging this deal, Israel’s Spike missiles trumped the American Javelin missile. The U.S. lost out, thanks to its reluctance to allow Indian experts to evaluate the missiles and for its initial unwillingness to transfer technology to India. Later, the U.S. offered to co-produce and develop the missiles in India along with India’s Defence Research and Development Organisation (DRDO).

In contrast, Israel, though initially disinclined, then agreed to transfer the technology and produce the missiles as part of Indian Prime Minister Narendra Modi’s "Make in India" initiative.

In an unprecedented move, a major private player, Kalyani Strategic Systems Limited (part of the Kalyani Group, was allowed to make military-grade missiles in collaboration with Israel’s state-owned Rafael Advanced Defense Systems.

The Spike missile deal is the first missile facility to be set up by a private player - thus marking the genesis of India’s private military industrial complex.

A joint venture, 51:49, was set up between the two - Kalyani Rafael Advanced Defence systems. A 24,000 square foot missile development facility sprang up in a nondescript industrial complex in a record ten months on the outskirts of Hyderabad, a city in southern India.

That facility was also expected to make a wide range of advanced weapons system, such "Command Control and Guidance, Electro-Optics, Remote Weapon Systems, Precision Guided Munitions and System Engineering for System Integration."

However, within a few months of setting up the facility, India canceled the Spike missile deal without offering any reasons.

The Indian media reported that the deal was canceled because "importing Spike Anti-Tank Guided Missiles would adversely affect the indigenous weapons manufacturing system by India’s public sector ammunitions maker, the Defence Research and Development Organization."

Indeed, India's DRDO was developing its own Spike alternative: the NAG 190 (Cobra) "fire and forget" Anti-Tank Guided Missile, also with a range of four kilometres. The missiles’ capabilities have few competitors worldwide. It was successfully test-fired at the Pokhran test firing range in Rajasthan's Thar desert.

However, the Indian army has so far not commented on how successful the testing of the NAG 190 actually was. Since then, the Indian army has delayed its induction, citing high expenses and numerous technical shortcomings, including inadequate thermal sensors.

DRDO promises to deliver them by the end of the year, seeking more time to operationalize them.

India desperately needs to upgrade and modernize its weapons in general. But in this specific case, one of the challenges of this large-scale process has been exposed. The Indian army and the state manufacturer are at loggerheads with each other over defining operational criteria: Serially, at the last minute, the Indian army changes its requirements, and the DRDO keeps missing its deadlines.

That extra time was, and is, a problem.

India’s defense is primarily geared to challenge aggression from its neighbors, Pakistan and China. India fought a war with China in 1962 and three wars with Pakistan since independence in 1947. All three states are nuclear powers. India considers both as strategic threats, whether singly or – in the worst case scenario – together.

But the Indian army faces a severe shortage of anti-tank guided missiles. It is is 60 per cent short of what it’s authorized to hold, meaning it needs 68000 rounds and 850 launchers to be at what defense analysts have determined is an adequate state of readiness.

Though Mr. Modi and his party, the BJP, speak of making India self-reliant in defense, his policies point to a different direction – that of starving public sector defense manufacturers and selling them off to private parties, thuscreating a private military industrial complex.

In an unprecedented move, the Modi government has reportedly decided not to make any further investments in India’s public sector defense companies – the Ordnance Factory Board and Defence Public Sector Undertakings. Instead, it wants private players to create military products.

Speaking to the Hindu Business Line, a defence ministry official said: "Modernisation, upgrades, repowering, product launches and improvement in operational efficiencies are to be carried out with the help of private players with proven track record."

At the same time Mr Modi’s government has also decided to sell its stakes in India’s public sector defense undertakings – Bharat Dynamics Limited and Hindustan Aeronautics Limited.

Ironically, the "Make in India" initiative has become a vehicle to facilitate big international defense deals as joint ventures with foreign players in India - Adani’s tie-up with the Swedish SAAB; Reliance’s joint venture with Dassault; Larsen and Toubro’s with France’s MBDA; Tata with Lockheed Martin; Mahindra with Airbus are just a few examples. India becomes the manufacturing site – to manufacture replica products developed abroad, rather than becoming integrated into a higher-value R&D process.

A few decades ago, India's defense secrets were traded for whisky. A dreadful concoction of wars cooked up in the Cold War era – the Indo-China war and the Indo-Pak war – saw the Russians, the Americans and the French amply profit from India’s conflicts. From that time and into the present day, India’s defense procurement has long been the subject of financial and political corruption scandals.

Now the playing field is different. The globalization of weapons has brought in new players, with Israel being one of them. Israel has steadily risen up the ranks as an arms supplier to India.

India’s corporate conglomerates see an opportunity to grab a piece of the pie. They have put a lot of time, money and effort into lobbying, running PR campaigns and creative corporate restructuring to grab a piece of India’s huge defense budget, which stands at around $53.5 billion. Warheads and missiles are the new profit-making machines for India’s conglomerates.

As regards the Spike missile deal, Netanyahu raised it with Modi on his trip to India earlier this year. After their meeting, on his flight back from Ahmedabad, a jubilant Netanyahu announced to reporters: "They are reauthorizing the Spike deal," even as his advisers cautioned it could well end up being worth only half the intial $500 million agreed.

But the Indian government didn’t confirm Netanyahu’s claim. Mr. Modi knows it’s a politically sensitive issue – especially with elections only a few months away in 2019. Any attempt to acquire weapons from a foreign player will be seen as jeopardizing India’s indigenous weapons manufacturing program.

Meanwhile, the Israeli-Indian Hyderabad facility is being retasked to manufacture other weapons systems while the decision is being considered and reconsidered, for the fourth year running.

In election-season India, there’s a lot of political rhetoric about making the country self-reliant vis-a-vis its defense capabilities. It’s a theme that is historically and politically resonant.

However, there’s far less noise being made about the real beneficiaries of these carefully designed "Made in India" policies – or what it means for India to push the privatization of the means for war.

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