Netanyahu's mission in January: to save the Indian income channel. opinion
India wants to eliminate reciprocal procurement from Israeli manufacturers, a requirement that poses difficulties for Israel's defense industries. Netanyahu flew to India in January to try to reach a compromise with the Moody government
Ami Rukhas Domba 28/12/2017 Contact author
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Photo: Adi Baruch - netanyahu.org.il
Netanyahu flew to India next month with one main goal - to save the income channel of the defense industries. After India stopped the spike deal, India now wants full production in the country of any hardware purchased from Israel. Without reciprocal purchasing in Israel. This is an equation that can significantly harm the small and medium-sized businesses in the Israeli defense industry.
Among other things, Israeli industry is being riddled with rickshaws because of an internal struggle between the Indian defense industries and the military. This struggle stems from different interests. The manufacturing and development sector in India has repeatedly failed in recent years to provide advanced weapons, and therefore wants the money and Western technology to reach it, so that it will be able to show rapid successes, the army, the end user, wants a weapon that works. We want advanced and proven weapons.
Part of this struggle is reflected in India's recent decision to continue with two projects the army does not want - the Taja and the Arjun. The army does not want that it claims they are not good enough in front of foreign hardware. The Defense Ministry and the industries want the money to show success. To this story was also the crusade conducted by the Ministry of Defense and the DRDO by means of messengers in the Indian media against Moody claiming that he had closed a bad deal on the Rafael planes with the French.
The Americans are coming
In addition to internal politics in India, the Israeli defense industry has faced the past two years, and in the future will also experience aggressive marketing by American industries. One example is the American attempt to thwart the Spike deal with a counteroffensive of the Jablin missiles to India. The Israeli hardware is the main contender with American hardware at the quality level, and this is reflected in anti-tank missiles, UAVs and other fields.
The Americans do not make discounts for Israelis. And that is an understatement. The Americans also have the FMS trick, which allows India to buy American products at a price that the US government buys, and the White House is willing to give Indians technology that he was not prepared for.In addition to the Americans, European industries - including France, Sweden and others - Fighter jets are only part of the story.
It should be borne in mind that India's investment in defense is due to two catalysts - China and Pakistan. And as these two countries invest more in military development, the arms race accelerates, along with the defense budget of India. Alongside the acquisition of Indian technology, Delhi also wants to turn the country into a weapons exporter. The transfer of foreign technology and the establishment of factories in India serve the purpose. According to Huffingtonpost, India wants to reach two billion dollars in defense exports by 2019.
Reciprocal procurement? India does not really put its name on Israel
According to The Marker, "India has recently increased its interoperability requirements from 30% to 50%, and in some cases to 60%." Some of the Indian demands involve transition to local production in India. How important is the Israeli economy? According to the Ministry of Economy published in 2016: "During the year 2016, 665 Israeli companies benefited from reciprocal purchase funds, an increase of 41 companies compared to last year, of which 205 Israeli companies first benefited from collaborations with committed companies - In the periphery they enjoyed reciprocal purchasing in 2016 - an increase of 12 percent.204 Small and medium-sized companies benefited from reciprocal purchases - an increase of 17 percent.
The need for Indian reciprocal purchases is increasing against the background of the expected decrease in the conversion of US dollar assistance to shekels. As part of the US foreign aid agreement of the Obama era, Israel's ability to convert dollars into shekels will be reduced. And if less money comes in from India and the US, defense production in Israel is expected to decrease, and not only do defense companies deal with efficiency and construction of manufacturing facilities in the US, Europe and Latin America. Which inject money into a local defense industry.
Netanyahu understands this, too. Therefore, there is a government decision from June 2017 allocating NIS 600,000 each year, between 2017 and 2018, to examine, in coordination with the Ministry of Defense, the manner in which the obligation of Israeli companies belonging to the defense industry to meet reciprocal procurement requirements in India, Were allocated between the years 2019-2020 for the same subject. In addition, a special committee was set up in the Ministry of Defense to examine how to contend with a reduction in shekels converted from US dollar assistance. It is still unclear what to do with this committee. Its activity is not publicly reflected.
Another body involved in the collection of reciprocal purchases is the Authority for Industrial Cooperation and the Promotion of Foreign Investment. A beautiful name for the collection body of the Israeli government. The PA is supposed to ensure that reciprocal purchase funds reach Israel according to agreements with foreign countries from which Israel has purchased security products. 50 percent, if it comes to security deals, 20 percent if it is a civil transaction. In the case of India and the US, the PA can not really help India wants all the reciprocal procurement to be in India, that is, from Indian producers (every dollar India buys from you, you have to buy from an Indian industry.) The US has already signed Israel The conversion of dollars and transfers all Israeli procurement to American manufacturers only.
A recent report by the Authority states: "Recently there has been increasing evidence that various countries are withdrawing from the trend of globalization and increasing the degree of protection of their local produce, on the grounds that international trade has indeed expanded growth, but has also contributed to widening the gaps. For example, the Indian government has for some time been promoting the "India in Make" initiative, which aims to strengthen local industry and is working to implement a reciprocal procurement policy that sets a particularly high standard for defense companiesParticipating in local tenders. "For example, in the framework of the reciprocal procurement policy, foreign companies are required to allocate production to local manufacturers and to impart knowledge to their employees.As a result of this policy, Israeli companies that have won local tenders in India are forced to divert orders from Israeli subcontractors to factories in India, In cooperation with the heads of the Israeli defense industry in order to find solutions for the Israeli subcontractors by connecting them with multi-national companies committed to reciprocal procurement in Israel. In this way, it is possible to compensate these suppliers, even if only partially, for the decline in the volume of orders in the domestic market. "An indiandefencereview article analyzes the changes in the Indian reciprocal purchasing method over the years. "Buy" comes to cover the inability of the DRDO and local industries to achieve results without foreign technology, for example, the Arjun tank, the Taja and the Kaveri engine, "the big players in the private sector barely spend money on research. The design capability of the Navratna PSUs as well as that of HAL and BEL is slim. The navy has a certain design capability, but not in advanced fields such as nuclear submarine technology, "the analysts write," There is no doubt that India is using the defense procurement card to promote local industries. Can be dependent on foreign countries, and for a large part of the defense industry's revenue is based on Indian money, and in such a reality it is worth sticking to India even at the cost of losing reciprocal purchases. The reciprocal procurement, the money h Foreign, and foreign, to Israeli industry The problem with this equation is that almost no working hands are needed in Israel Will India agree to purchase other non-security products in Israel, such as cyber, agriculture, water treatment or medical products? Reciprocal procurement in Israel will have to reinvent themselves, and the state will do well, if you allocate
http://www.israeldefense.co.il/he/node/32402
India wants to eliminate reciprocal procurement from Israeli manufacturers, a requirement that poses difficulties for Israel's defense industries. Netanyahu flew to India in January to try to reach a compromise with the Moody government
Ami Rukhas Domba 28/12/2017 Contact author
send to a friend
A + A-size
Share on
Share on
Photo: Adi Baruch - netanyahu.org.il
Netanyahu flew to India next month with one main goal - to save the income channel of the defense industries. After India stopped the spike deal, India now wants full production in the country of any hardware purchased from Israel. Without reciprocal purchasing in Israel. This is an equation that can significantly harm the small and medium-sized businesses in the Israeli defense industry.
Among other things, Israeli industry is being riddled with rickshaws because of an internal struggle between the Indian defense industries and the military. This struggle stems from different interests. The manufacturing and development sector in India has repeatedly failed in recent years to provide advanced weapons, and therefore wants the money and Western technology to reach it, so that it will be able to show rapid successes, the army, the end user, wants a weapon that works. We want advanced and proven weapons.
Part of this struggle is reflected in India's recent decision to continue with two projects the army does not want - the Taja and the Arjun. The army does not want that it claims they are not good enough in front of foreign hardware. The Defense Ministry and the industries want the money to show success. To this story was also the crusade conducted by the Ministry of Defense and the DRDO by means of messengers in the Indian media against Moody claiming that he had closed a bad deal on the Rafael planes with the French.
The Americans are coming
In addition to internal politics in India, the Israeli defense industry has faced the past two years, and in the future will also experience aggressive marketing by American industries. One example is the American attempt to thwart the Spike deal with a counteroffensive of the Jablin missiles to India. The Israeli hardware is the main contender with American hardware at the quality level, and this is reflected in anti-tank missiles, UAVs and other fields.
The Americans do not make discounts for Israelis. And that is an understatement. The Americans also have the FMS trick, which allows India to buy American products at a price that the US government buys, and the White House is willing to give Indians technology that he was not prepared for.In addition to the Americans, European industries - including France, Sweden and others - Fighter jets are only part of the story.
It should be borne in mind that India's investment in defense is due to two catalysts - China and Pakistan. And as these two countries invest more in military development, the arms race accelerates, along with the defense budget of India. Alongside the acquisition of Indian technology, Delhi also wants to turn the country into a weapons exporter. The transfer of foreign technology and the establishment of factories in India serve the purpose. According to Huffingtonpost, India wants to reach two billion dollars in defense exports by 2019.
Reciprocal procurement? India does not really put its name on Israel
According to The Marker, "India has recently increased its interoperability requirements from 30% to 50%, and in some cases to 60%." Some of the Indian demands involve transition to local production in India. How important is the Israeli economy? According to the Ministry of Economy published in 2016: "During the year 2016, 665 Israeli companies benefited from reciprocal purchase funds, an increase of 41 companies compared to last year, of which 205 Israeli companies first benefited from collaborations with committed companies - In the periphery they enjoyed reciprocal purchasing in 2016 - an increase of 12 percent.204 Small and medium-sized companies benefited from reciprocal purchases - an increase of 17 percent.
The need for Indian reciprocal purchases is increasing against the background of the expected decrease in the conversion of US dollar assistance to shekels. As part of the US foreign aid agreement of the Obama era, Israel's ability to convert dollars into shekels will be reduced. And if less money comes in from India and the US, defense production in Israel is expected to decrease, and not only do defense companies deal with efficiency and construction of manufacturing facilities in the US, Europe and Latin America. Which inject money into a local defense industry.
Netanyahu understands this, too. Therefore, there is a government decision from June 2017 allocating NIS 600,000 each year, between 2017 and 2018, to examine, in coordination with the Ministry of Defense, the manner in which the obligation of Israeli companies belonging to the defense industry to meet reciprocal procurement requirements in India, Were allocated between the years 2019-2020 for the same subject. In addition, a special committee was set up in the Ministry of Defense to examine how to contend with a reduction in shekels converted from US dollar assistance. It is still unclear what to do with this committee. Its activity is not publicly reflected.
Another body involved in the collection of reciprocal purchases is the Authority for Industrial Cooperation and the Promotion of Foreign Investment. A beautiful name for the collection body of the Israeli government. The PA is supposed to ensure that reciprocal purchase funds reach Israel according to agreements with foreign countries from which Israel has purchased security products. 50 percent, if it comes to security deals, 20 percent if it is a civil transaction. In the case of India and the US, the PA can not really help India wants all the reciprocal procurement to be in India, that is, from Indian producers (every dollar India buys from you, you have to buy from an Indian industry.) The US has already signed Israel The conversion of dollars and transfers all Israeli procurement to American manufacturers only.
A recent report by the Authority states: "Recently there has been increasing evidence that various countries are withdrawing from the trend of globalization and increasing the degree of protection of their local produce, on the grounds that international trade has indeed expanded growth, but has also contributed to widening the gaps. For example, the Indian government has for some time been promoting the "India in Make" initiative, which aims to strengthen local industry and is working to implement a reciprocal procurement policy that sets a particularly high standard for defense companiesParticipating in local tenders. "For example, in the framework of the reciprocal procurement policy, foreign companies are required to allocate production to local manufacturers and to impart knowledge to their employees.As a result of this policy, Israeli companies that have won local tenders in India are forced to divert orders from Israeli subcontractors to factories in India, In cooperation with the heads of the Israeli defense industry in order to find solutions for the Israeli subcontractors by connecting them with multi-national companies committed to reciprocal procurement in Israel. In this way, it is possible to compensate these suppliers, even if only partially, for the decline in the volume of orders in the domestic market. "An indiandefencereview article analyzes the changes in the Indian reciprocal purchasing method over the years. "Buy" comes to cover the inability of the DRDO and local industries to achieve results without foreign technology, for example, the Arjun tank, the Taja and the Kaveri engine, "the big players in the private sector barely spend money on research. The design capability of the Navratna PSUs as well as that of HAL and BEL is slim. The navy has a certain design capability, but not in advanced fields such as nuclear submarine technology, "the analysts write," There is no doubt that India is using the defense procurement card to promote local industries. Can be dependent on foreign countries, and for a large part of the defense industry's revenue is based on Indian money, and in such a reality it is worth sticking to India even at the cost of losing reciprocal purchases. The reciprocal procurement, the money h Foreign, and foreign, to Israeli industry The problem with this equation is that almost no working hands are needed in Israel Will India agree to purchase other non-security products in Israel, such as cyber, agriculture, water treatment or medical products? Reciprocal procurement in Israel will have to reinvent themselves, and the state will do well, if you allocate
http://www.israeldefense.co.il/he/node/32402
