India–Israel ties are entering a new phase defined by trade talks, technology partnerships, and strategic coordination that now stretch well beyond the symbolism of high-level visits. Indian Minister of Commerce and Industry, Piyush Goyal’s November 2025 trip is best read as a nudge to processes already underway: a proposed free trade agreement, a new bilateral investment framework, and sectoral cooperation in areas like agritech, water, cyber, and defence.
Trade and the FTA Pivot
The most consequential development is the decision to push ahead with an India–Israel Free Trade Agreement after years of slow-moving negotiations that began in 2010. Both governments have now signed Terms of Reference in Tel Aviv, which set the scope for talks on tariff reduction, services, investment facilitation, and regulatory cooperation. Officials on both sides are signalling a phased FTA—an “early harvest” first phase focusing on low‑contention items and quick commercial gains, followed by a second, more ambitious round on sensitive sectors.
This comes against the backdrop of a contraction in bilateral merchandise trade: India’s exports to Israel fell by about half to around USD 2.14 billion in 2024–25, while imports declined over a quarter to roughly USD 1.48 billion, taking total trade to about USD 3.6 billion. The structure of trade is also in flux: diamonds, petroleum, and chemicals still dominate, but there is a visible uptick in electronics, high‑tech equipment, communications systems, and medical devices. For New Delhi, an FTA is a way to reclaim lost export momentum in a highly specialised, high‑income market; for Jerusalem, it is an entry ramp into India’s large manufacturing and consumer base.
Investment Architecture and Capital Flows
A quieter but structurally important shift is the new Bilateral Investment Agreement signed in 2025, which replaces the old treaty framework and is tailored to India’s reworked model BIT. The agreement offers improved legal comfort to investors, including a shorter local‑remedies period for Israeli investors and coverage of portfolio investments—something India has generally been cautious about. Israel is notably the first OECD partner with which India has concluded such a modern BIA, signaling that the relationship is being used as a testbed for more sophisticated capital‑flow arrangements.
FDI volumes remain modest in absolute terms—about USD 338 million from Israel into India between 2000 and mid‑2025—but the profile is shifting towards technology‑intensive sectors like cybersecurity, agritech, water treatment, and med‑tech rather than just niche manufacturing. With the investment treaty in place and an FTA on the horizon, both sides are effectively building a legal scaffold that can support larger, longer‑horizon bets, including joint R&D, scale‑up of Israeli start‑ups in India, and Indian participation in Israeli infrastructure and mobility projects.
Technology, Innovation, and Sectoral Ties
Bilateral cooperation increasingly pivots around Israel’s reputation as a “startup nation” and India’s market scale and implementation capacity. Business forums and CEO‑level platforms have been structured around three broad baskets:
- Agriculture and water: Israeli strengths in micro‑irrigation, drip systems, water reuse, and climate‑resilient seeds map directly onto India’s concerns around farm productivity and water stress. India has already hosted multiple Centres of Excellence in agriculture with Israeli support; current conversations emphasise scaling these into commercial agritech ventures and rural demonstration models.
- Cybersecurity and digital infrastructure: Israeli firms specialising in network security, threat intelligence, and critical‑infrastructure protection are eyeing India’s rapidly growing digital economy, from financial services to public digital stacks. For India, integrating such capabilities into both state systems and private platforms is part of a broader push to harden cyber defences.
- Health, mobility, and advanced manufacturing: Visits to Israeli hospitals and smart‑mobility companies underscore interest in telemedicine, AI‑assisted diagnostics, autonomous and connected transport, and high‑precision manufacturing. These align with India’s domestic agendas on health access, metro expansion, and industrial upgrading.
A striking example is Israel’s massive metro and tunnelling plans—estimated around USD 50 billion for Tel Aviv’s network—where Indian construction and engineering firms are being encouraged to bid, leveraging their experience across 20‑plus Indian cities. If Indian companies secure a share of this work, it would move the partnership from technology import to large‑scale, two‑way project participation.
Strategic and Security Dimensions
Beyond economics, the relationship retains a strong strategic and defence core. Over three decades, Israel has become a key supplier of radar, missiles, UAVs, and surveillance systems to India, while joint development projects—from missile defence to sensors—have deepened interdependence. In 2025, the two sides signed an MoU expanding the scope of bilateral defence cooperation, including co‑development, joint production, and counter‑terrorism collaboration. This builds on earlier defence working groups and long‑standing operational familiarity between their security establishments.
Cyber and intelligence cooperation are less visible but increasingly central, given shared concerns over terrorism, regional instability, and critical infrastructure security. For India, Israel offers cutting‑edge capabilities in domains—such as electronic warfare and cyber defence—where Western partners are sometimes more constrained. For Israel, India is a large, politically reliable market whose purchases provide both revenue and scale for defence tech.
Regional Context
Politically, the deepening of India–Israel ties is occurring in a crowded regional landscape. India balances its defence and tech embrace of Israel with energy and diaspora interests in the Gulf and long‑standing support for a two‑state solution on Palestine. The pattern of recent moves—high‑profile visits, but with messaging anchored in innovation, food security, and jobs—suggests an attempt to keep the relationship de‑securitised in public framing even as security cooperation expands behind the scenes.
Israel, meanwhile, sees India as a crucial Asian anchor at a time when its own regional environment is uncertain and when diversification beyond traditional Western markets is strategically desirable. The fact that New Delhi chose Israel as the first OECD partner for its new‑model BIA, and that both sides are pushing an FTA despite political headwinds elsewhere, signals a long‑term bet that survives electoral cycles or tactical disagreements.
The Next Phase
Looking ahead, the “next phase” of India–Israel ties will likely be defined by how quickly the legal and institutional architecture being built now translates into real projects on the ground. Three trajectories stand out:
- A phased FTA that starts with clearly beneficial sectors—high‑tech goods, services, innovation partnerships—while parking contentious agricultural and sensitive tariff lines for later negotiation.
- Scaling of pilot collaborations in agritech, water management, and cyber into national‑level programmes in India, potentially anchored in special innovation clusters or industrial corridors.
- Deepening of defence industrial cooperation, including Make‑in‑India manufacturing of Israeli systems and joint export to third markets.
The direction of travel is clear. India and Israel are moving from a relationship once defined primarily by defence and discreet security cooperation to one anchored in a complex web of trade rules, investment treaties, innovation networks, and cross‑border projects. High‑level visits act as catalysts, but the real story is the quiet institutionalisation of a partnership that now spans boardrooms, labs, farms, and metro tunnels as much as it does missile ranges and intelligence grids.
