India signs $1.1b IAI tanker aircraft deal – report

Hindustan Aeronautics (HAL) has closed a deal worth $900 million – $1.1 billion with Israel Aerospace Industries (IAI) to convert six Boeing 767 aircraft into tanker transport aircraft, “Defense News India” reports. The report notes that until now, the Indian Air Force has relied on outdated Ilyushin 78 aircraft.

The conversion of the Boeing 767 aircraft by IAI and HAL was preferred to the procurement of two tankers: the Airbus A330 MRTT and the Boeing KC 46. A fundamental reason for this is that their choice aligns with the Make in India vision of Indian Prime Minister Narendra Modi. This program, which is intended to increase Indian independence in all areas, was set up 17 years, and IAI is one of the leading Israeli companies in participating in it.

In March 2024, IAI launched its Indian subsidiary in New Delhi – Aerospace Services India (ASI). The company was founded as part of a collaboration between IAI and DRDO, the Indian government’s defense R&D agency (the counterpart of Israel’s MAFAT) to develop and support products that are manufactured for the Indian military. ASI has 50 employees, 97% of whom are Indian citizens. The company’s offices are in New Delhi, but the company has branches throughout India.

ASI conducts deals in rupees, and is the only company dealing in the Medium Range Air Defense System (MRSAM), an advanced and innovative system that provides protection against a variety of aerial threats and is used by the Indian Army, Air Force, and Navy. The system includes a phased array radar, a command and control system, mobile launchers, and interceptors. The MRSAM system was developed in collaboration between IAI and DRDO for the Indian armed forces.

A global leader in aircraft conversion

IAI is a global leader in aircraft conversion, which is mostly for commercial purposes, converting passenger to cargo planes. The Israeli company announced in September that it had successfully completed the process of converting a Boeing 777 from passenger to cargo configuration, becoming the first in the world to receive the STC: a license to convert a passenger aircraft to cargo from the civil aviation authorities in the US (FAA) and Israel (CAAI).

Why do conversions actually take place? Passenger aircraft wear out over the course of about 15 years of operation, both in terms of seats and electronic systems. Cargo aircraft can be purchased from the manufacturer, but the cost of conversion is about 20% lower than the price of a new aircraft. Thus, the total investment by airlines in a converted Boeing 777 aircraft is, for example, about $264-340 million – depending on the specific model.

In the event that the conversion is carried out when the aircraft is 15 years old, it can be used as a cargo aircraft for about 50 more years. Until now, IAI has converted Boeing 737, 747, 767 – and now, as mentioned, 777. The larger volume of the aircraft significantly affects the carrying capacity. While a 767 can carry 60 tons as a cargo plane, the 777 has a significant increase to 100 tons.

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The cost advantages offered by IAI are also reflected in the refueling configuration. Airbus won two tenders with the A330 MRTT, for $1.6 billion in 2009-2010 and $2 billion in 2013-2016. However, the Indian ministries of finance and defense decided to cancel the tenders due to maintenance costs. The price of the KC-46 Pegasus is about $160 million per unit, but it is not suitable for Make in India.

So ultimately India decided to close the deal with IAI and HAL, with the aim of starting deliveries of the aircraft in 2030. The conversion of the aircraft is another result of closer cooperation between IAI and one of the largest companies in India. They also collaborate in the fields of drones and missiles.

Published by Globes, Israel business news – en.globes.co.il – on May 6, 2026.

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