India will jointly develop and co-produce a new generation of medium range surface-to-air missiles with Israel to secure the country's strategic assests from growing threats posed by aerial attacks and the proliferation of missiles in the region.

The setting up of a joint venture for producing the missiles at an estimated cost of Rs 10,000 crore ($2.5 billion) was cleared by the Cabinet Committee on Security, which met in Delhi on Thursday under the chairmanship of Prime Minister Manmohan Singh [Images].

According to highly placed defence sources, the new generation missile with the capability of hitting aerial targets 70 km away, would be developed by the Defence Research and Development Organisation, Indian Air Force and Israel Aerospace Industries.

The DRDO will be the "prime contractor" for the project, which will have an indegenious component of Rs 2,300 crore.

The new generation missile will replace the IAF's ageing Russian-made Pechora missiles.