Prime Minister Narendra Modi concluded a two-day visit to Israel on Thursday, during which the two countries agreed to elevate their relationship to a special strategic partnership. The two sides advance negotiations on trade, investment and connectivity frameworks, according to a joint statement.

Why it matters: India, under Modi, is doubling down on its economic and political relations with Israel despite a widespread global backlash against Israel’s war against Gaza. Modi and Netanyahu’s public bonhomie is likely to ruffle feathers in Arab capitals even as New Delhi continues to expand ties with MENA countries.

Trade and investment: The leaders also discussed strengthening the investment framework, including progress following a bilateral investment agreement (BIA), aimed at providing greater clarity for cross-border investments. India and Israel will intensify negotiations toward a bilateral freetrade agreement, with the next round of talks scheduled for May. In FY 2024-25, India-Israel trade stood at USD 3.62 bn.

Financial cooperation: The two sides agreed to deepen engagement through a structured financial dialogue, including cross-border linkages between India’s digital payments system and Israeli fast payment systems.

Labour mobility: The two signed agreements to widen worker mobility frameworks, with Israel expected to admit up to 50k additional Indian workers over the next five years. The expanded arrangements cover construction, caregiving, manufacturing and services sectors.

Connectivity alignment: The leaders reaffirmed support for the India-Middle East-Europe Economic Corridor (IMEC), first announced at the 2023 G20 Summit. IMEC aims to link India to Europe via the Gulf, Israel, and the Mediterranean through integrated port, rail and digital infrastructure networks. The two sides will also explore cooperation in defence co-development and co-production, cybersecurity, AI, and advanced technologies.

Regional frameworks: Both sides also reviewed progress under the I2U2 grouping — comprising India, Israel, the UAE and the US — which focuses on cooperation in food security, clean energy and infrastructure. Separately, Netanyahu referenced his proposed “hexagon” alignment involving India, select Arab states, African partners and Mediterranean countries.

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