The Indian Ministry of Defence has decided to scrap a $500 million deal with Israel to procure Spike Man-Portable Anti-Tank Guided Missiles in favour of an indigenously developed and produced system, The Indian Express reported on Monday.

Unnamed sources told The Indian Express that the deal to purchase the 3rd generation ATGM was cancelled because it would impact India’s Defense Research and Development Organization’s indigenous weapon systems development programme, and the ministry will task the DRDO with developing a new missile system, the report said.

“DRDO has successfully produced the Nag and Anamika ATGMs. It is confident about providing the Army with an MPATGM of 3rd generation missile technology, at par with Spike, within three to four years. It won’t also need any transfer of technology,” The Indian Express quoted unnamed ministry sources as saying.

In June 2016, then Defence Minister Manohar Parrikar set up a committee of experts to explore indigenous missile system development. According to The Indian Express, the DRDO and the Army disagreed on whether to continue with the purchase or develop an Indian system, but Army headquarters agreed earlier this month to retract the Spike RFP.

The deal for 321 launchers, 8,356 missiles, 15 training simulators and other equipment with Irsrael’s Rafael Advanced Defence Systems was seen as evidence of growing Indo-Israel defense cooperation and was expected to be signed after final price negotiations were completed last year. Rafael entered into a joint venture with Kalyani group for missile production in India, and a missile sub-systems manufacturing facility near Hyderabad was opened in August.

As part of the procurement process, India earlier rejected a Raytheon-Lockheed Martin offer for the American Javelin system, apparently dropped due in no small part to transfer of technology terms unfavourable to India.

The cancellation of the Spike deal could be a setback to the Indian Army’s modernisation programme. The Army previously highlighted the equipment’s “operational urgency,” arguing that Spike would give “a major capability impetus to troops deployed on the Line of Control” between the India- and Pakistan-controlled parts of the former Jammu and Kashmir state. The Indian Army currently uses the 2nd generation Konkurs and Milan ATGMs.