Israel and India to sign landmark economic agreement worth billions

Israel and India are set to sign a major economic bilateral agreement in the coming weeks, Ynet News reported Wednesday.

Finance Minister Bezalel Smotrich is expected to lead a large Israeli delegation to India later this month to finalize the agreement, accompanied by Finance Ministry Director-General Ilan Rom and other senior officials. The landmark deal is projected to generate billions of dollars in trade and investment between the two countries, potentially creating a level of exchange “unprecedented in recent years.”

“India sees strategic value in linking with Israel’s economy,” a senior Finance Ministry official said, and being hailed as an “exceptional achievement,” especially amid international boycott calls against Israel and its economy following the Hamas-initiated Gaza War.

Last Friday, Turkish Foreign Minister Hakan Fidan announced that Turkey would cut all economic ties with Israel and close its airspace to Israeli aircraft.

India, the world’s most populous nation with nearly 1.5 billion people, has built close commercial and security ties with Israel. Unlike China and Russia, India voiced strong support for Israel after the Hamas Oct. 7 attack. The upcoming agreement is reportedly the first of its kind between the Asian giant and a Western-oriented economy.

Economic analysts see India’s vast manufacturing base and Israel’s innovation-driven economy as a natural fit. Israel has become a key supplier of advanced military and civilian technologies to India, while India plays an increasingly vital role in Israel’s pivot toward Asian markets and away from its reliance on often critical European partners.

In May, Israeli Foreign Minister Eli Cohen traveled to India to promote stronger bilateral relations between the two countries.

“India as a world power, the most populous country in the world and the fifth-largest economy, can play a central role in promoting the Abraham Accords and the economic connection between Israel and the moderate countries in the Middle East,” Cohen assessed.

He credited Indian Prime Minister Narendra Modi for developing strong ties with Israeli Prime Minister Benjamin Netanyahu.

“Modi is one of the main reasons why relations between Israel and India today are the closest and strongest since the establishment of relations between the countries in 1992,” Cohen said.

India and Israel established official diplomatic relations in 1992 following the end of the Cold War and the collapse of the Soviet Union. Bilateral trade between Israel and India increased from $200 million to 10.77 billion in 2023.

Despite the vast differences in size, India and Israel are both democracies that face security challenges from Islamist terrorism and extremism.

In April, India and Israel Aerospace Industries (IAI) conducted successful tests of its Barak medium-range surface-to-air missile, strengthening defense cooperation between the two nations.