NEW DELHI - India and Israel will co-develop and produce a medium-range surface-to-air missile for use by the Indian Army at a cost of over $2.5 billion, but there is no clarity on which country will own the Intellectual Property Right (IPR) for the newly developed missile.

A Ministry of Defence (MoD) official said the weapon, dubbed MRSAM, will be produced by state-owned Bharat Dynamics Limited (BDL) in partnership with other state-owned and private defense companies, but refused to say who will own the data package for the technology.

"The formal clearance for the MRSAM project has been given by the Cabinet committee on security headed by the prime minister last week," the MoD official said.

A formal contract will be awarded later this month.

Israel Aerospace Industries executives here were unavailable for comment.

The MRSAM will be developed jointly by India's state-owned defense research agency, the Defence Research and Development Organization (DRDO), and Israel Aerospace Industries. The weapon will have the capability to shoot down enemy aircraft and drones at a strike range between 50 to 70 kilometers.

Bhupinder Yadav, a retired Indian army major general and defense analyst, explained that IAI is the prime design authority for the project and India's DRDO is only a buyer. "The intellectual property rights of the critical missiles technology are with IAI with the exception of those subsystems developed by DRDO."

The Indian Army has been demanding a new MRSAM package for over a decade to replace the aging Russian weapons, Kvadrat, and OSA-AKM, bought between 1970 and 1980 from the Soviet Union.

"The Indian army wants to use the MRSAM to provide air defense to the mechanized formations operating in the plains, semi desert and desert sectors of the country," said an Indian army official.

According to Yadav, IAI's Elta Systems will provide the radar and Israel's Rafael will produce the interceptor missiles in association with many Indian private and state-owned companies such as the Tata Power SED, Larsen & Toubro and state-owned Bharat Electronics and Bharat Dynamics, among many others.

"The systems will be manufactured in India and would have an 80 percent indigenous content," Yadav said.

There is no official word on the workshare agreement, however, as the Indian defense ministry has declined comment on the matter.

In 2008, an attempt to acquire MRSAMs from the global market failed because none of the bidders met the technology transfer requirements. At the time, tenders were sent to Rafael of Israel, MBDA of France, Raytheon of the United States, Rheinmetall Defence of Germany, and KBP Tula of Russia.

The army variant of the MRSAM will be in addition to the Indo-Israeli MRSAM variants cleared in 2009 for the Indian air force and the Indian navy.

IAI and DRDO have already conducted three flight tests of the MRSAM weapon system to validate all missile components. "The missile successfully intercepted a moving aerial target in all the three tests, and the system is due for induction this year," the MoD official said.

The naval variant of the MRSAM, called Long Range Surface to Air Missile (LR-SAM), has carried out trials and the weapon is considered to be proven. "The deliveries (of LR-SAM) have already been started," MoD official added.