An Israeli government-owned arms company, blacklisted by India and barred from commerce with the subcontinent for the coming 10 years, plans to appeal the verdict.
“The decision is based on incorrect facts and it ignores the data and documents that the Israel Military Industries sent to the Indian Ministry of Defense,” Israel Military Industries said in a statement. “IMI will appeal the decision before the relevant Indian authorities.”
Israel, having surpassed Russia several years ago, is the foremost supplier of arms to India. Over the past decade, IMI, Israel Aerospace Industries, Rafael and other branches of the private-and-government-owned Israeli arms industries have reportedly sold some $8 billion worth of weapons systems to India, representing roughly 15 percent of total sales. The closure of the market to IMI, for the span of a decade, is a significant blow to the Israeli defense industries.
“When you lose a market with that kind of potential, of course it is a problem,” said Dr. Yaacov Lifshitz, the former director-general of the finance ministry and former chief economist for the Israeli ministry of defense.
The alleged bribery scandal began in March 2009 when IMI signed a deal with Ordnance Factory Board Director Sudipta Ghosh to supply India with various forms of ammunition. In June of that year Ghosh was brought up on corruption charges in what Indian authorities have called “one of the worst corruption cases ever.”
Four other international arms-manufacturing firms were added to India’s black list along with IMI and two Indian companies.
For Israel, which often uses third party mediators in the sales of weapons systems overseas, this is not the first such entanglement. Soltam, an artillery manufacturer recently acquired by Elbit Systems, has reportedly been blacklisted by the Philippines since July 2011. Rafael and the Israel Aerospace Industry came under suspicion in India in 2009 after an Indian newspaper, DNA, reportedly accused them of securing the 1.4-billion-dollar sale of Barak Mark VIII missiles to India with kickbacks to key officials. The Indian minister of defense eventually cleared the Israeli firms of all suspicion and authorized the deal.
Unlike other countries with large arms manufacturing industries, Israel sells 75 percent of its total production overseas, according to Lifshitz. By comparison the United States, by far the largest manufacturer of arms in the world, only sells 10 percent of its weaponry abroad.
For Israel, Lifshitz said, the arms industry has been seen in recent years as economic rather than strategic in nature. In a recent paper for the BESA Center for Strategic Studies he suggested that this orientation be reexamined.