By Nigam Prusty
NEW DELHI (Reuters) - India has opted to buy Israel's Spike anti-tank guided missile, a defense ministry source said on Saturday, rejecting a rival U.S. offer of Javelin missiles that Washington had lobbied hard to win.
India will buy at least 8,000 Spike missiles and more than 300 launchers in a deal worth 32 billion rupees ($525 million), the source said after a meeting of India's Defense Acquisition Council.
Prime Minister Narendra Modi's five-month-old government wants to clear a backlog of defense orders and boost India's firepower, amid recent border tensions with China and heavy exchanges of fire with Pakistan across the Kashmiri frontier.
"National security is the paramount concern of the government," the source quoted Defense Minister Arun Jaitley, who also holds the finance portfolio, as telling the procurement panel.
"All hurdles and bottlenecks in the procurement process should be addressed expeditiously so that the pace of acquisition is not stymied."
Among other business cleared by the panel, India will issue a request for proposals to supply six submarines, added the source, who was not authorized to comment on the record and did not elaborate.
Spike is a man-portable 'fire and forget' anti-tank missile that locks on to targets before shooting. It is produced by Israel's Rafael Advanced Defense Systems, which declined to comment.
It beat out the rival U.S. Javelin weapons system, built by Lockheed Martin Corp and Raytheon Co, that Defense Secretary Chuck Hagel had pitched during Modi's visit to Washington at the end of September.
Senior U.S. officials had said they were still discussing the Javelin order as part of a broader push to deepen defense industry ties with India by increasing the share of production done in the country.
Analysts estimate that India, the world's largest arms buyer, will invest as much as $250 billion in upgrading its Soviet-era military hardware and close the gap on strategic rival China, which spends three times as much a year on defense.
(Additional reporting by Dan Williams in Jerusalem; Writing by Douglas Busvine and Rosalind Russell)