India-Israel: Co-Developing 21st-Century Manufacturing

The strategic partnership between India and Israel is poised for a significant pivot, moving beyond traditional defense, intelligence, and agricultural cooperation. The new focus advocates for co-developing 21st-century manufacturing technologies, including heavy electrical equipment, industrial automation, and robotics.

This industrial collaboration promises a more enduring and strategically valuable alliance, integrating seamlessly into global supply chains and workforces. It directly addresses the geoeconomic imperative for supply chain resilience and trusted partnerships, influenced by post-pandemic shifts and escalating geopolitical tensions.

Complementary Economic Drivers

India’s Finance Ministry has previously underscored risks to economic stability, citing AI advancements, geopolitical tensions, and supply chain weaponization. This context has spurred policies like “friend-shoring” and production-linked incentive schemes, aiming to fortify domestic manufacturing.

• India’s industrial robotics market is projected to exceed $10 billion by the mid-2030s.

Despite its substantial manufacturing base in heavy electrical equipment and a rapidly expanding robotics market, India’s growth in automation remains largely import-driven. The nation currently lacks depth in high-value areas such as machine vision, industrial AI software, and cybersecurity for operational technology.

Conversely, Israel boasts a robust Industry 4.0 innovation ecosystem, featuring over two hundred companies specializing in critical areas. These include operations optimization, machine vision, predictive maintenance, robotics, and industrial cybersecurity.

While Israeli firms have demonstrated considerable impact globally, they are constrained by a lack of industrial land, a large manufacturing workforce, and an extensive domestic market for scaling disruptive innovations.

Strategic Synergy & Joint Ventures

The synergy between the two nations is clear: India offers manufacturing scale and deployment environments, while Israel provides the essential software, sensing, and AI layers. This combination can create intelligent infrastructure, fostering globally competitive products with co-owned intellectual property.

• Heavy electrical equipment: For grid modernization initiatives.
• Industrial automation: Focused on AI-driven, sensor-rich systems.
• Robotics: Emphasizing perception and autonomous decision-making capabilities.

Existing institutional frameworks, such as the India-Israel Industrial R&D and Innovation Fund (I4F) and ongoing Free Trade Agreement negotiations, provide a solid foundation. These are further bolstered by a Bilateral Investment Agreement signed in September 2025 and the State Bank of India’s facilitation of rupee-based trade settlement in January 2026.

However, recent regional security issues and the Gaza conflict have introduced headwinds, contributing to a decline in bilateral merchandise trade and reduced international investment in Israeli assets. Overcoming these challenges will be crucial for the proposed industrial collaboration to reach its full potential.

The shift towards co-developing advanced manufacturing technologies offers both India and Israel a path to deeper economic integration and a more resilient strategic future.