Last week, I had the opportunity to attend the India-Israel Business Summit in New Delhi, hosted by Israel’s Ambassador to India, Reuven Azar. The event was a testament to the growing economic partnership between the two nations, with business leaders from diverse sectors engaging in insightful discussions and forging new collaborations. The camaraderie and shared vision among Indian and Israeli entrepreneurs highlighted the strong and evolving business ties built over the past decade. From technology and defense to agriculture, water management, and renewable energy, India and Israel are leveraging their strengths to drive innovation and economic growth. This strategic partnership not only fosters bilateral trade but also paves the way for groundbreaking advancements that benefit both nations.
Over the past decade, under the leadership of Prime Minister Narendra Modi and his counterpart Prime Minister Benjamin Netanyahu, India and Israel have significantly strengthened their economic and trade relations. From strategic defense partnerships to groundbreaking collaborations in technology, agriculture, and energy, the two nations have forged a dynamic and mutually beneficial relationship. Bilateral trade has expanded exponentially, reflecting a commitment to deeper economic engagement and cooperation.
Since the establishment of full diplomatic relations in 1992, trade between India and Israel has grown from a modest $200 million to an impressive $10.77 billion in 2022-23, excluding defense transactions. This rapid expansion has been fueled by increasing exports from India to Israel, which reached $8.45 billion during this period, while Israeli exports to India stood at $2.32 billion. However, in 2023-24, bilateral trade saw a decline to $6.53 billion, largely due to regional security concerns and trade disruptions.
Despite these fluctuations, both nations continue to explore new avenues for trade and investment, diversifying their economic engagements beyond traditional sectors such as diamonds and defense.
Diversification of Trade: Beyond Diamonds and Arms
While diamonds and military equipment once dominated India-Israel trade, the relationship has evolved into a broader economic partnership, covering a diverse range of sectors:
India’s Exports to Israel:
- Petroleum Products – A significant driver of trade, India’s petroleum product exports to Israel reached an all-time high of $5.5 billion in 2022-23, marking a 3.5-fold increase from $1.6 billion the previous year.
- Organic Chemicals – Contributing to industrial applications, exports in this category were valued at $296.5 million in 2015.
- Electronic Equipment – Supplying Israel’s tech-driven economy, exports reached $121.2 million in 2015.
- Medical and Technical Equipment – Essential for Israel’s healthcare and research sectors, these exports were valued at $59.3 million in 2015.
- Plastics – Another critical sector, with exports amounting to $56.4 million in 2015.
Israel’s Exports to India:
- Precious Stones and Metals – Valued at $945.87 million in 2022, this remains a key component of trade.
- Electrical and Electronic Equipment – Technology transfer and high-end electronic components accounted for $730.28 million in 2022.
- Aircraft and Spacecraft Equipment – Strengthening India’s aerospace sector, this trade amounted to $483.89 million in 2022.
- Fertilizers – Israel, known for its advanced agricultural technologies, exported fertilizers worth $380.89 million to India in 2022.
- Optical, Photographic, and Medical Apparatus – Advanced medical and precision technologies formed a $324.88 million trade segment in 2022.
Key Sectors of Strategic Collaboration
Defense and Security
Defense has been a cornerstone of India-Israel relations, with India emerging as the largest buyer of Israeli military equipment. Between 2014 and 2024, India purchased Israeli defense systems worth approximately $2.9 billion. These include advanced radars, surveillance drones, missile defense systems, and cyber warfare technologies.
A major milestone was the 2018 joint venture between Adani Defence & Aerospace and Israel’s Elbit Systems, which established a production line for Hermes 900 military drones in India. In 2024, 20 Hermes 900 drones were supplied to Israel, marking a shift towards two-way defense cooperation.
Technology and Industrial Innovation
In 2018, India and Israel launched the India-Israel Industrial R&D and Technological Innovation Fund (I4F), a $40 million initiative aimed at fostering joint research in sectors such as water management, healthcare, and artificial intelligence.
A game-changing development came in September 2024 when Israel’s Tower Semiconductor partnered with India’s Adani Group to invest $10 billion in a semiconductor fabrication plant in Maharashtra. With an initial capacity of 40,000 wafers, this plant is set to bolster India’s position as a global semiconductor hub, reducing dependence on China and other foreign suppliers.
Agriculture Cooperation
Israel’s expertise in desert agriculture and water conservation has been instrumental in transforming Indian farming practices. The Indo-Israel Agricultural Project (IIAP) has established multiple Centers of Excellence across India, introducing farmers to advanced irrigation techniques, precision farming, and post-harvest technologies. As of 2024, more than 30 Centers of Excellence (CoEs) are operational across 13 Indian states, benefiting over 1.2 million farmers annually. In Haryana, farmers trained at CoEs reduced water consumption by 65% while increasing productivity by over 200%.
In 2023, India and Israel launched the India-Israel Digital Agriculture Initiative (IIDAI) to introduce AI-driven soil monitoring, precision irrigation, and smart pest control systems.
Furthermore, the Indo-Israel Drone Project (IIDP) is testing drone-based spraying for pesticides and fertilizers, expected to cut chemical usage by 30% while ensuring uniform distribution.
Israeli greenhouse technology has enabled Indian farmers to grow tomatoes, cucumbers, bell peppers, and exotic vegetables with minimal water usage.
In Maharashtra, Israeli grafting techniques and micro-irrigation systems have improved mango yields by 40%, reducing losses due to drought. Similar results have been observed in Punjab and Rajasthan, where citrus fruit production has doubled with improved pest management techniques. With Israeli assistance, Rajasthan’s arid regions now support large-scale date palm cultivation, providing farmers with a new, high-value crop suited to desert climates.
Water Management Cooperation
Drip Irrigation is revolutionising Indian Farming. Introduced by Israeli firm Netafim, drip irrigation has helped Indian farmers reduce water consumption by up to 60% while increasing crop yields. In Maharashtra’s drought-prone areas, Netafim’s technology has revived over 300,000 hectares of farmland, making it possible for farmers to grow two or more crops per year.
In 2021, Israel’s IDE Technologies partnered with India’s VA Tech Wabag to set up desalination plants along India’s coastline, turning seawater into drinking water. A large-scale desalination project in Chennai now supplies 100 million liters of fresh water daily, benefiting 500,000 residents.
Israel has helped Indian cities, including Delhi and Mumbai, build advanced sewage treatment plants, allowing wastewater to be reused for irrigation and industrial use.In Gujarat, Israel’s Mekorot water company has helped set up India’s first fully automated wastewater treatment facility.
In 2022, Israel joined India’s Namami Gange project to clean the Ganges, providing cutting-edge filtration systems and bio-remediation techniques. The partnership has improved water quality in certain stretches of the river by 35% within two years.
In 2023, India launched the National Water Grid Initiative (NWGI) in partnership with Israeli experts to interlink rivers and transfer excess monsoon water to drought-prone regions. Satellite-based water monitoring, developed with Israeli technology, now helps predict water shortages, allowing authorities to take preventive measures.
Energy Cooperation
Energy security is another vital aspect of the India-Israel partnership. In 2017, a consortium of Indian oil companies, including ONGC Videsh, Bharat PetroResources, Indian Oil, and Oil India, received an exploration license from Israel to participate in offshore natural gas exploration. This collaboration not only diversifies India’s energy sources but also strengthens energy security for both nations.
In 2022, India and Israel signed a Liquefied Natural Gas (LNG) agreement, allowing India to diversify its gas imports beyond the Middle East and Russia. India now imports 2.5 million metric tons of LNG annually from Israel, supporting the transition to cleaner fuels.
India’s Adani Green Energy partnered with Israel’s SolarEdge in 2023 to deploy smart solar inverters and advanced PV technology across Indian solar farms. This has improved solar efficiency by 15-20%, making solar power more viable and cost-effective.
In 2024, Israel’s StoreDot partnered with Tata Motors to introduce ultra-fast charging batteries for electric vehicles in India. These silicon-dominant lithium-ion batteries can charge EVs in under 5 minutes, addressing India’s biggest challenge in EV adoption—long charging times.
India and Israel are collaborating on green hydrogen production, with Israel’s H2Pro helping India develop hydrogen fuel technology for industrial and transportation use. By 2030, India aims to produce 5 million metric tons of green hydrogen annually, reducing dependence on fossil fuels.
The Free Trade Agreement (FTA): A Long-Awaited Step
Since 2010, India and Israel have been negotiating a Free Trade Agreement (FTA) to enhance trade cooperation in key sectors such as information technology, pharmaceuticals, water management, and biotechnology. Despite multiple rounds of discussions, the FTA is yet to be finalized.
With India’s focus on ‘Make in India’ and Israel’s cutting-edge technological expertise, an FTA could unlock massive economic potential, reducing tariffs and facilitating smoother trade flows between the two nations.
Despite the robust partnership, geopolitical events have occasionally impacted trade and investment. The conflict in the Middle East in 2023-24 caused disruptions in shipping routes and affected trade volumes. However, both nations have demonstrated resilience, finding alternative routes and leveraging diplomatic channels to sustain economic cooperation.
Looking ahead, India and Israel are well-positioned to deepen their economic engagement. The focus on co-developing defense systems, expanding semiconductor manufacturing, and strengthening agricultural ties presents vast opportunities for growth. The finalization of the FTA could be a game-changer, propelling bilateral trade beyond the current levels and cementing India and Israel as long-term strategic partners.
Under the leadership of Prime Minister Narendra Modi and Prime Minister Benjamin Netanyahu, the India-Israel partnership has evolved into a comprehensive and multi-sectoral alliance. The past decade has witnessed remarkable growth in bilateral trade, driven by strategic collaborations in defense, technology, energy, and agriculture. As both nations continue to innovate and expand their economic footprint, the India-Israel relationship stands as a testament to the power of strategic diplomacy and economic cooperation.
As we look ahead, the synergy between India and Israel promises to further strengthen, unlocking new opportunities for collaboration and mutual prosperity. With continued high-level engagements, groundbreaking investments, and a shared vision for technological advancement, the next decade promises even greater economic prosperity for both nations, setting a benchmark for strategic partnerships in the 21st century.
