The year 2023 marks the 31st anniversary of diplomatic relations between India and Israel. The recent visit of Israel’s foreign minister Eli Kohen to India, on the 9th of May 2023 may be viewed against this backdrop. The discussions mostly revolved around defence, while means to strengthen relations in areas including agriculture, water, security, trade, and regional connectivity also featured prominently.

An important outcome of the bilateral talks was the signing of a mobility pact between both the countries. The pact essentially allows about 42,000 Indian employees to work in Israel, mostly in the nursing and construction fields. Amid growing strategic convergences and trust, the India-Israel partnership can evolve as a mutually beneficial one in the coming years. Greater cooperation between the two countries is of immense significance for 21st Century geopolitics.

India-Israel Defence Ties: Through Thick and Thin

Diplomatic relations between India and Israel were officially established in 1992. The two countries came together in the backdrop of the disintegration of the Soviet Union in 1991. Until then, the Soviet Union had been India’s major defence partner and supplier of military equipment. The collapse of the regime posed an unprecedented challenge to India, which needed to diversify its sources of defence procurement. Israel, a country that possessed sophisticated weaponry and defence technologies, presented an attractive option. Mutual trust and understanding between the two countries have only grown stronger since then.

Even after several countries stepped back from extending military assistance to India following the 1998 Pokhran nuclear tests, Israel proved to be as consistent as ever. Israel continued to supply India with vital equipment including laser guided bombs, unmanned aerial vehicles (UAVs), Spyder-MR air defence systems, Python-5 missiles, Derby BVRAAM (Beyond Visual Range air-to-air Missile), to mention a few.

In the contemporary scenario, India sees Israel as playing a major role in fulfilling its growing defence procurement needs. India has consistently been among the biggest importers in the military sector, accounting for about 3.7% of the worldwide military spending in 2020. As a result, the defence sector has been one of the main areas of thrust under the drive for ‘Aatma Nirbhar Bharat’ (Self-Reliant India). As per the policy, India’s defence ministry has laid a strong emphasis on indigenisation in the defence sector, an endeavour where cooperation with Israeli companies in establishing joint ventures in India has been vital.

Shalom Israel: Easing the Regulatory Environment

The defence relations between India and Israel have picked up substantial momentum in recent years. Mechanisms such as the India-Israel Joint Working Group (JWG) have helped build trust and confidence among the two partners. The 15th JWG meeting on bilateral defence cooperation held in October 2021 at Tel Aviv, charted out a 10-year roadmap for defence cooperation between the countries.

India has enacted a number of policies to create a favourable regulatory environment to ease cooperation with valued partners such as Israel in the defence sector. The Strategic Partnership Model introduced in 2017 seeks to establish long-term strategic partnerships with global Original Equipment Manufacturers. It emphasises upon building a transparent and competitive process of manufacturing equipment. Meanwhile, a 2019 notification issued by the Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce and Industry has strived to liberalise the manufacturing of defence components in India.

The Defence Acquisition Procedure (DAP), introduced in 2020 further looks to transform India into a global manufacturing hub of indigenously developed weapons and equipment. The government has also made room for increased Foreign Direct Investment (FDI) in the defence sector to 74%, through Automatic Route, and 100% by government route, for companies seeking license. Additionally, India aims to foster self-reliance and boost exports under the Defence Production and Export Promotion Policy (DPEP) introduced in 2020.

Drawing impetus from historically good relations, these regulatory changes have arguably encouraged Israeli private companies to make their forays into the Indian market. Besides, India’s provision of low-cost manufacturing with high skilled labour, is a significant attraction for Israeli firms. Furthermore, industry bodies such as the Society of Indian Defence Manufacturers (SIDM) and SIBAT, the international defence cooperation directorate of the Israel Ministry of Defence (IMOD), have also taken interest in organizing foreign delegations and in identifying opportunities for defence cooperation.

India’s fast-growing military industry presents a significant opportunity for global defence manufacturers, including for Israeli firms. The potential for a high return on investment for Indo-Israeli joint ventures in the defence sector was recently highlighted with the USD 100 million (Rs. 684 crore) contract cornered by the Kalyani Rafael Advanced Systems (KRAS). KRAS, a joint venture between Israel’s Rafael Advanced Defence Systems and India’s Kalyani Strategic Systems (which owns a 51% share), was contracted to supply about 1000 BARAK-8 MRSAM (Medium Range Surface to Air Missile) missile kits to the Indian Armed Forces.

An Expanding Partnership

The defence sector cooperation between India and Israel has paved the way for a growing synergy in relations between the two countries. Improved ties with Israel seem to be boosting the perception of India’s diplomatic heft in West Asia. The foreign ministers of India, Israel, the United States and the United Arab Emirates held a virtual summit in October 2021. This has been hailed as “a first step towards expanding quadrilateral cooperation” in the region. This framework has since got crystallised as the I2U2 grouping and is expected to allow India to deepen its engagement with Israel without harming its relationship with Arab states.

India has been attempting to leverage its manpower in order to enhance capabilities in fields such as shipbuilding, precision machining and electronics assembly. The cooperation with Israel can aid India’s efforts to emerge as an Original Equipment Manufacturer. The two countries can pool together their expertise and resources to develop and manufacture cutting edge technologies. Such an initiative would reduce developmental costs while also paving the way for joint export ventures. The growing cooperation between India and Israel spanning areas of joint research, manufacturing and production, exports, and technical assistance is much needed for the sustainment of both the countries in the contemporary world order.

Disclaimer: The article expresses the author’s views on the matter and do not reflect the opinions and beliefs of any institution they belong to or of Trivium Think Tank and the StraTechos website.