India, Israel sign $1.4 bn deal on air defence system

India has signed its biggest defence deal with Israel for the purchase of a state-of-the-art air defence system at a whopping cost of $1.4 billion (Rs 7,042).

Israel Aerospace Industries (IAI) has officially acknowledged that the defence deal between the two countries was inked on February 27 under which Israel will develop and manufacture seaborne and shore-based systems against missile attack on India, business daily 'Globes' reported.

The signing of the deal comes as India is in advance stage of testing of its own anti-missile shield. The Defence Research and Development Organisation (DRDO) has already successfully test-fired its advanced air defence (AAD) missile.

The two sides have agreed that part of the payment for the systems will be made during the development period and the balance will be paid during the 66 month delivery period, which is slated to begin 90 months from the date the advance payment is received, the report said.

As per the agreement, IAI has also undertaken to procure military or aviation products and services from India. It will invest in defence companies in India up to an amount equal to 30 per cent of the contract. India is currently Israel's largest arms buyer.