India may have recognised the state of Israel in 1950, but diplomatic ties between the two were formally established over 40 years later, in 1992. Since then, however, commercial relations between the two countries have developed considerably, with total bilateral trade more than doubling to $10.8 billion in 2022-23 from $5.3 billion five years earlier, in 2018-19.
In comparison, total trade between India and Iran, Israel's rival in the region, stood at a mere $2.3 billion during 2022-23.
In FY23, India's total exports grew 6.9 percent over the previous fiscal, but that to Israel jumped 76.2 percent, while imports from the Mediterranean country contracted by 24.4 percent during the same period, putting the trade balance between the two in India's favor.
The South Asian nation is Israel’s second-largest trade partner in Asia and ninth-largest globally.
India’s key exports to Israel include automotive diesel, chemical and mineral products, machinery and electrical equipment, plastics, textile and apparel products, base metals, transport equipment, and agricultural products, while New Delhi’s major imports from Tel Aviv include electronic goods, aircraft, spacecraft and parts thereof, fertilizers, and arms and ammunition.
FTA bottlenecks
The two countries are also in the process of negotiating a free trade agreement (FTA) , talks for which reportedly resumed in 2021.
However, the trade deal between the two is yet to be clinched due to reasons ranging from longer-pending issues like disagreements over the movement of Indian IT professionals, to newer ones with perhaps larger ramifications like the ongoing Gaza war, according to media reports.
Beyond trade through government channels, India and Israel have witnessed robust growth in ties through private businesses as well. Indian companies, notably Jain Irrigation, Sun Pharma, Tata Consultancy Services, Wipro, Tech Mahindra, State Bank of India, and Infosys, among others, have been expanding their presence in Israel, while Israeli companies have invested in India in areas including renewable energy, real estate and water technologies.
Foreign direct investment into India from Israel stood at $284.96 million between April 2000 and March 2023, as per Invest India.
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