Breakthrough in India-Israel economic relations

Israel and India are moving toward signing a long-awaited free trade agreement (FTA) as President Donald Trump pushes his vision of connecting India, Europe, and the US through Israel.

Israeli Economy Minister Nir Barkat speaks at the India-Israel Business Forum in New Delhi, February 2025. (Source: Israeli Ministry of Economy)

Big ideas, strong commitment.

Leading a large business delegation to New Delhi last week, Economy Minister Nir Barkat said the visit marked "a breakthrough in economic relations between Israel and India."

"The largest Israeli business delegation ever to travel abroad is 'proof of our commitment to strengthening economic ties, expanding Israeli exports, and opening the Indian market to groundbreaking Israeli technologies,'" Barkat emphasized.

The cooperation between the two countries “will boost economic growth, increase mutual investment and create new jobs on both sides.” During his third visit to India in two years, Minister Nir Barkat expressed optimism about strengthening bilateral economic and trade relations but did not give a specific timeline for signing an FTA, which is expected to increase Israeli exports to the country of over a billion people and create more business opportunities. However, according to India Today, the prospect of signing is very close, possibly this year.

India and Israel began FTA negotiations in 2010. Both sides set a target of finalizing the agreement by mid-2022, but negotiations are still ongoing.

The rapprochement between Israel and India is taking place against the backdrop of newly elected US President Donald Trump continuing his predecessor Joe Biden's efforts to build a rail and transport corridor connecting India with the Middle East, Europe, and the US – an ambitious project aimed at boosting economic growth and political cooperation.

During a meeting at the White House with Indian Prime Minister Narendra Modi on February 13, Trump announced that the two leaders “agreed to work together to help build one of the greatest trade routes in history.” This route “runs from India to Israel, through Italy and on to the United States, connecting partners, roads, railways and submarine cables.”

An Israeli government official shared with the Times of Israel about that “big idea,” which is to “create a corridor connecting India, through Israel, to Europe and all the way to the United States, as envisioned by Mr. Trump.”

This explains why Tel Aviv “will sign a new trade agreement” with New Delhi, two countries that “have a deep rapprochement,” and why a large Israeli business delegation is present there.

India and Israel officially established diplomatic relations in 1992. In 2017, Prime Minister Narendra Modi became the first Indian leader to visit Tel Aviv. A year later, Israeli Prime Minister Benjamin Netanyahu also visited New Delhi.

100 companies, 600 meetings

The business delegation that arrived in New Delhi last week included more than 100 Israeli companies, in the fields of cybersecurity, smart agriculture, renewable energy, digital health, water technology, artificial intelligence (AI), and big data.

Participating companies organized over 600 networking and interaction meetings with hundreds of Indian business leaders to foster economic partnerships, expand mutual investment, and strengthen bilateral relations.

During the visit, the delegation met with major Indian business groups such as TATA, Nasscom, and GMR, and also participated in India Energy Week.

"Geopolitics brings Israel very close to the US, but also very close to India. Israel is small, but we are very innovative, and the skills of Israeli entrepreneurs combined with the innovation and scalability of large businesses in India make for a classic combination." (Israeli Minister of Economy Nir Barkat)

Indian Minister of Commerce and Industry Piyush Goyal said, “Israel’s innovation and security capabilities are extraordinary, and the technology demonstrated in ‘Operation Beepers’ (Israel’s secret operation against Hezbollah in September 2024) is truly exceptional and inspiring – we would like to have this technology here as well.”

According to Piyush Goyal, “there are many opportunities for cooperation between Israel and India, which will lead to significant geopolitical and economic achievements in the region.” Both countries can greatly benefit from each other’s expertise in key areas such as agricultural technology, finance, and emerging technologies.

Speaking at a business forum in New Delhi, Minister Goyal revealed plans to lead a business delegation of hundreds of Indian executives to Israel this year.

The delegation will focus on expanding investment in Israeli companies, promoting cooperation in technology and key areas such as water technology, cybersecurity, healthcare, and advanced agriculture.

Israeli Economy Minister Nir Barkat and Indian Commerce and Industry Minister Piyush Goyal. (Source: PTI)

Assessing the “great interest shown by Indian companies in collaborating with the Israeli industry highlights the enormous economic potential,” Avi Balshnikov, President of the Israel Export Institute, the organizer of this business delegation, affirmed, “this is just the beginning and we expect significant growth in trade and investment between the two countries in the coming years.”

In 2024, bilateral trade between Israel and India reached $5 billion, including $2.5 billion in Israeli exports, $1 billion in diamond trade, and $1.5 billion in imports from India.

Of course, the relationship between Israel and India is not limited to diamonds. Israel is India's fourth-largest supplier of military hardware. The two sides have also signed cooperation agreements in the fields of water systems, agriculture, healthcare, and solar energy.

Along with the determination to strengthen economic relations, concrete steps such as large-scale business delegation exchanges and, especially, the signing of the FTA will open up new horizons of trade and investment opportunities, benefiting businesses and the economies of both strategic partners.

Source: https://baoquocte.vn/buoc-dot-pha-trong-quan-he-kinh-te-an-do-israel-304683.html