India-Israel Relations – Significance & Challenges – Explained Pointwise

India-Israel relations are characterized by a strong, multi-dimensional strategic partnership that prioritizes defense, security, technology, agriculture, and innovation while showing remarkable political alignment on key global and regional issues.

Historical development:

Significance of India-Israel Bilateral Relations:

1. Political Convergence: Both countries support each other’s positions on critical issues—India has backed Israel’s right to self-defence, and Israel supports India’s stance against cross-border terrorism. This convergence raises each nation’s diplomatic profile and provides reliable allies in volatile regions.​
2. Defense and Security:
   • Israel is one of India’s top defense suppliers, providing advanced technologies in drones, air defense, missiles, and intelligence—enhancing India’s military readiness and anti-terror capabilities.
   • Joint R&D and co-production in areas like electronic warfare and missile defense directly strengthen India’s self-reliance and modernization.​
3. Intelligence and Counterterrorism: Robust intelligence-sharing and operational cooperation have helped India counter terrorism and address emerging hybrid threats, with both countries facing similar security challenges in their regions.
4. Trade and Investment:
   • Bilateral trade—now touching $7–8 billion—spans agriculture, high-tech, defense, and pharmaceuticals.
   • The 2025 Bilateral Investment Treaty is expected to boost two-way FDI, fintech, and start-up collaborations, setting the stage for a future free trade pact.
5. Agriculture and Water Management: Israeli innovation in drip irrigation, water conservation, and precision agriculture has been scaled across India, improving Indian farmers’ efficiency, raising rural incomes, and addressing chronic water scarcity.
6. Innovation Ecosystem: India benefits from Israeli expertise in start-up incubation, cyber security, AI, and “smart city” technologies, and the I4F fund fosters joint research and product development for global markets.

Challenges in India-Israel Bilateral Relations:

1. The Palestine Issue: While India has successfully employed a policy of “de-hyphenation” (treating ties with Israel and Palestine separately), India remains a traditional supporter of the Palestinian cause in multilateral forums like the UN. This diplomatic position is sometimes at odds with Israel’s global interests.
2. Energy and Diaspora: India relies heavily on the Gulf Cooperation Council (GCC) for a substantial portion of its crude oil and natural gas supplies. Furthermore, over 9 million Indian expatriates reside in the Gulf, contributing critical remittances to the Indian economy. Any perceived over-alignment with Israel risks jeopardizing these vital economic and energy lifelines.
3. Iran & China Factors: India’s ties with Iran (for Chabahar port, regional strategy, energy) and Israel’s very close relationship with China in high technology (Israel-China trade: $22 billion+) produce diverging priorities, and India is concerned about technology transfers from Israel to China and Chinese FDI in Israel.
4. Limited Technology Transfer: India’s priority under its “Aatmanirbhar Bharat” initiative is to acquire technology for domestic manufacturing. While Israel is generally more willing to share defense technology than other nations, it still places restrictions on the full transfer of proprietary or sensitive systems, especially those containing US components (which are subject to US export control laws).
5. Non-Defense Trade Plateau: Despite ambitious targets, non-defense trade has generally plateaued between $6 billion and $8 billion, highlighting challenges in market access and scaling commercial engagement beyond established sectors.
6. Intellectual Property Rights (IPR): Israel, a high-tech exporter, shares concerns with other Western nations regarding India’s relatively lenient IPR regime, particularly concerning the protection of software and digital innovation.
7. Public Opinion in India: Despite the government’s strong public embrace, a significant segment of the Indian public and political opposition maintains traditional sympathy for the Palestinian cause, requiring the ruling party to occasionally temper its rhetoric and maintain a semblance of balance on the issue.

Areas of cooperation between India & Israel:

1. Defence & Security:
   • Arms Trade: Israel is consistently one of India’s top three defense suppliers. India procures critical systems like radar, missile defense shields (e.g., the Barak 8 system developed jointly), drones, and sophisticated surveillance equipment.
   • Joint Research and Development (R&D): The focus has shifted from a buyer-seller relationship to joint development and co-production, aligning with India’s “Aatmanirbhar Bharat” initiative.
   • Counter-Terrorism: Extensive intelligence sharing and training cooperation, particularly relevant due to shared security threats.
2. Water & Agriculture:
   • Drip Irrigation and Micro-Irrigation: Israel has implemented the Indo-Israel Agricultural Project (IIAP), establishing dozens of “Centres of Excellence” across various Indian states. These centres train Indian farmers on high-tech techniques, primarily focused on micro-irrigation, protected cultivation (greenhouses), and maximizing yield with minimal water use.
   • Water Management and Recycling: Cooperation in water treatment, desalination, and recycling technology to help India address its growing urban water scarcity.
3. Cybersecurity and R&D: Deep cooperation in cybersecurity, and joint research and funding in high-tech areas through the India-Israel Industrial R&D and Technological Innovation Fund (I4F).
4. I2U2 Grouping: India and Israel are core members of the I2U2 initiative, along with the US and UAE. This group focuses on promoting joint investments in key sectors like food security, water, energy, and transportation infrastructure, demonstrating Israel’s role in India’s regional economic strategy.

Way Forward:

1. Deepen Strategic and Defense Cooperation:
   • Strengthen defense ties by accelerating joint R&D, co-production of advanced military technologies (drones, missile defense, cyber security), and institutionalizing regular high-level dialogues.​
   • Expand intelligence and counter-terrorism cooperation, leveraging Israel’s expertise and India’s regional security needs.
2. Expand Economic and Investment Collaboration: Fully implement the 2025 Bilateral Investment Treaty to boost two-way FDI, remove barriers, and scaffold a future Free Trade Agreement to increase trade volumes beyond the current $7–8 billion.
3. Enhance Innovation and Technology Exchange: Foster shared innovation in AI, biotech, cybersecurity, and smart infrastructure utilizing the India-Israel Industrial R&D and Innovation Fund (I4F).
4. De-Hyphenation through Integration: By channeling joint investments and projects through the I2U2 framework, India demonstrates that its partnership with Israel is not exclusive but is actively beneficial to the Arab world. This provides a diplomatic shield for India’s ties to Israel.
5. Knowledge Corridors: Establish structured “Knowledge Corridors” linking major Indian R&D institutions (like the IITs and IISc) with top Israeli universities and research centers to ensure a steady flow of research talent and joint discovery.

Conclusion: A pragmatic, multi-sectoral, and balanced approach respecting geopolitical sensitivities and focusing on enhanced cooperation will cement India-Israel relations as a cornerstone of India’s strategic and innovation-driven growth trajectory.