N-pact may affect arms deal with Israel

India had emerged as the single largest purchaser of Israeli defence systems capping the Phalcon deal worth $1 billion.

The Israeli defence industry has expressed concern that the United States' tightening security ties with India will adversely affect their prospects in one of their key markets.

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"The Americans understood Israel is taking a huge market away from them. It took them time to respond, but they eventually did," a source at Israel's defence industries told local daily Yediot Ahronoth.

"From now on it will be much harder to carry out arms deals in India," the source added.

"The US plans on turning India into one of its arms industries' main export markets following the recent nuclear deal between the two countries during President Bush's visit to India," the report said.

India had emerged as the single largest purchaser of Israeli defence systems capping the Phalcon deal worth $1 billion.