Security, Trade and the Economy

The Business of the Indian-Israeli Defence Partnership

On September 14, the Indian government approved the purchase of 10 Israeli-made Heron UAVs for US $400 million. This purchase marks the growing trend of a closer trade relationship between India and Israel in the defense sector.

Modernization of the military has been a key priority for the administration of Narendra Modi. His government plans on replacing India’s predominantly Soviet-era military equipment with newer and more sophisticated assets. In February, India hosted Israeli Defense Minister Moshe Ya’alon.. To many, this historic visit signified a mutual desire for developing a stronger military trade relationship. During his trip, Ya’alon visited the Aero India Exhibition in Bangalore where he opened the Israeli pavilion. The exhibition is considered one of the foremost opportunities for international arms producers to vie for India’s vast US $150 billion allocation for defence purchasing.

One of the crowning achievements of the Israeli-Indian relationship occurred in February of 2006 when the two nations agreed to jointly develop the Barak 8 missile system. Israeli partners like Israeli Aerospace Industries, The Administration for the Development of Weapons and Technological Infrastructure, Elta Systems and Rafael Advanced Defence Systems were key collaborators alongside India’s Defence Research and Development Organization (DRDO) in this project. The missile’s first successful short range test occurred in Israel in May 2010. It successfully completed its first Control Navigation test in 2012 and its first full-system trial in Israel in 2014. The tests included both land and naval trials. It was announced that the Indian delegation would conduct tests of its own on-board the Indian destroyer Kolkata in 2016.

According to Siemon Wezeman of the Stockholm International Peace Research Institute, the burgeoning trade relations between Israel and India is part of a concerted Indian effort to loosen its dependency on Russia. For much of the 20th and early 21st centuries, Russia (and before that, the Soviet Union) was India’s primary weapons supplier. It accounted for 70% of India’s arms imports since 1950. Modi’s government plans on using more American, European and Israeli producers to upgrade India’s military equipment.

The growing trade relationship between Israel and India can be mutually beneficial. India provides Israel with a vast and emerging market for its military goods. To date, India is considered one of the fastest growing procurers of arms. It also has one of the largest defense budgets in the world. Israel provides India with innovative defense products and considerable technical expertise. This can be useful for India in its attempts to sustain regional peace and likewise to protect itself from foreign and domestic threats, including more recently, threats from Pakistan, Hezbollah and Al Qaeda.

According to Rafael Chairman, Yitzhak Gat, “India is a superpower that creates an opportunity for defence technology”. This is evidenced by the upward trajectory of the Israeli-Indian defense trade relationship. Israel is among the top arms suppliers to India with the relationship continuing to grow. The two countries have already completed US $10 billion worth of joint defense projects over the past 15 years. These projects range from drones to radar systems and spy technology. Based on the above plans made for the future, all indications suggest that Israel and India’s economic relationship in the defence sector will continue to flourish.

Anthony Galea
Anthony Galea is a Junior Research Fellow at the NATO Association of Canada. He is in his third year at Trinity College, University of Toronto pursuing an Honours Bachelor of Arts in Political Science and European Studies. His areas of interest include trade liberalization, intellectual property protection and the history of Western diplomacy.