IAI Nears $905 Million Deal to Convert Boeing Tankers for Indian Air Force

Israel Aerospace Industries (IAI) is on the verge of securing a major contract worth approximately $905.7 million in India to convert six passenger aircraft into aerial refueling tankers for the Indian Air Force. According to reports in Indian media and defense portals, the Israeli company was the sole bidder whose proposal cleared the evaluation stage in New Delhi, outperforming rival offers from Russian and European firms.

Under the proposed agreement, IAI will convert six Boeing 767 aircraft, with a commitment that at least 30% of the work will be executed locally in India. The Indian partner for the project is slated to be Hindustan Aeronautics Limited (HAL). IAI has built a robust presence in India, aligning with Prime Minister Narendra Modi's "Make in India" initiative. In March 2024, IAI established an Indian subsidiary in New Delhi, Aerospace Services India (ASI), which employs 50 personnel, 97% of whom are Indian nationals, and operates across the subcontinent.

ASI currently handles transactions in Indian rupees and serves as the sole entity supporting the Medium Range Surface-to-Air Missile (MRSAM) system used by the Indian Army, Air Force, and Navy. The MRSAM system was jointly developed by IAI and India's Defence Research and Development Organisation (DRDO).

Strategic Upgrade for the Indian Air Force

New Delhi views the tanker agreement as a crucial strategic necessity, as the Indian Air Force currently relies on six Ilyushin Il-78 tankers that fall short of operational requirements in both quality and quantity. While India previously explored various options and currently utilizes leased refueling aircraft as an interim solution, the Boeing 767 offers significantly superior performance, including a maximum range of approximately 12,000 kilometers and a fuel discharge rate of 4,000 liters per minute, compared to the Il-78.

This impending deal is set to become one of the largest defense contracts ever signed between Israel and India. According to data from the Stockholm International Peace Research Institute (SIPRI), India has established itself as the leading customer for Israeli defense exports, accounting for roughly 29% of defense exports between 2021 and 2025, ahead of Germany's 21% share driven by the Arrow 3 missile system acquisition.