Israel Aerospace Industries is negotiating a $1.5 billion deal with India to set up a defence system using innovative long-range missiles with a range of more than 100 km, a media report said in Jerusalem.

The deal also includes radar systems made by IAI's subsidiary, Elta Systems Limited, unmanned aerial vehicles, and possibly satellites build by the company as well, business daily Globes reported.

India's Supreme Procurement Council is said to have approved the deal a few months ago and Israel Aerospace Industries CEO, Yitzhak Nissan, is now in negotiations over the details.

IAI had last month launched its TechSAR all-weather, high-resolution radar satellite using an Indian launcher in collaboration with the Indian Space Research Organisation.

India is the largest purchaser of Israeli arms and the strong defence ties between the two countries is clearly demonstrated in the high profile visits of chief of staffs of all the three Indian armed forces during the last two years.