New Delhi has suspended all arms trade with Tel Aviv after blacklisting Israel Military Industries (IMI) over corruption allegations.

The Indian government says the contracts were halted for alleged 'illicit trading and bribery'.

Arms deals with six other companies --from Poland, Singapore as well as India-- were also suspended.


Click to view image: 'Union Defence Minister A K Antony'

The move, which came after the former head of India's Ordnance Factory Board (OFB) Sudipto Ghosh was arrested on corruption charges, puts billions of dollars worth of defense contracts at risk.

Ghosh is accused of receiving bribes from the arms manufacturers to favor them in arms purchase projects with OFB.

IMI had signed a $24 million contract with OFB under which it was about to set up an ordnance complex of five plants in northern India to manufacture 155mm Bi-Modular Charge Systems (BMCS) and other propellant charges for heavy caliber artillery ammunition for the army.

Arms trading between New Delhi and Tel Aviv, which is India's second biggest arm supplier after Russia, dates back to early 1990s, so far they have inked deals amounting to $8 billion.

Last month, India received the first of three Airborne Warning and Control System (AWACS) planes from Israel it purchased for $1.1 billion in 2004.

HE/SC/DT