‘FTA will boost Israeli investments into India ‘ : Envoy

Exclusive Interview with H.E. Reuven Azar, Ambassador of Israel to India
In conversation with Renu Malhotra. Excerpts :

H.E. Reuven Azar, Israel’s Ambassador to India, Sri Lanka and Bhutan, brings deep experience in foreign policy and strategic affairs. As India and Israel enter a new era of strategic cooperation, he shares his perspective on the future of bilateral technological and industrial partnership.

• • India and Israel share a growing strategic economic partnership. How do you see the next phase of India–Israel bilateral commerce evolving, especially in high-technology sectors?
    
    In the next phase, our transactional exchange of goods will add an additional layer which derives from partnerships and joint ventures. Israeli innovation will meet Indian manufacturing, deployment and scale-up businesses. We will see Indian conglomerates buying stakes in Israeli companies and leveraging solutions for their local and international markets. We will see Indian infrastructure companies exporting capabilities and inputs to Israel. The focus will be on areas such as electronics, defence related solutions, autonomous systems, cyber, water and agri-tech.

• • Israel is acknowledged globally as the ‘Startup Nation’. Which elements of Israel’s innovation ecosystem best complement India’s scale and capability?
    
    Israel brings a world-class innovation ecosystem defined by rapid prototyping, close integration of academia, industry and defense, and a strong venture culture. What India brings – in addition to all of the above – is scale: a vast engineering talent pool, large market demand and manufacturing capacity. Israeli solutions in mobility for example, can contribute to the competitiveness of the Indian automotive sector in external markets. Water solutions are being domesticated by Indian companies and implemented in water development projects across India. Cyber tools are being adapted to local demands. Together, Israeli ingenuity plus Indian scale creates a powerful synergy.

• • As Israel looks at India as a long-term strategic partner, what is your broader vision for the India–Israel industrial and technological relationship over the next decade?
    
    A deeply integrated industrial-technological partnership and interconnected chains of supply. These derive from trust and confidence in the openness and stability of the relationship. More joint production and expansion of joint R&D schemes in both defence and civilian tech. Development of export-oriented products and services to third markets. Over the next decade, I see India and Israel as co-builders of solutions addressing global challenges – from water scarcity and food security to advanced manufacturing and safe cyber infrastructures.

• • India–Israel bilateral trade has grown steadily. How do you assess the current volume, and what figures or targets define the next phase of expansion?
    
    Currently, our trade is in the ballpark of several billion US dollars annually. While meaningful, it does not yet reflect the full potential of our technological and industrial opportunities. One of the reasons for underperforming was a set of obstacles obstructing business. The Bilateral Investment Treaty signed a couple of months ago during the visit of Finance Minister Smotrich sent a first good signal to the private sector that things are changing. The signing of the terms of reference for a free trade agreement two weeks ago during the reciprocal visit of Minister of Industry and Trade Goyal to Israel is a second signal. We intend to finish the negotiations on the FTA quickly. In addition, we offered to sign a financial protocol which will help finance trade and investments. We are also acting to get the financial institutions to work more closely and lower the cost and time of transactions. Two months ago, During the visit of Defence Secretary Singh in Israel, we signed and MOU between our ministries of defence to enhance G2G cooperation. In the coming weeks I hope we will sign an updated security agreement to enhance B2B cooperation as well. Both governments have been pretty active in the last few months to pave the way for more exchanges, and I have no doubt the results will transpire in the bilateral trade data.

• • Which sectors do you identify as top priorities for India–Israel joint ventures-manufacturing, deep tech, defence systems, dual-use technologies, water innovation, or agricultural tech?
    
    Defence and dual-use technologies along with precision agriculture with focus on impacting the small farmer will continue to be the main verticals. However new spheres are being introduced now: manufacturing of electronic and communication equipment; water purification, management and desalination; mobility and automotive tech; health-tech; and cyber/information-security systems.

• • In terms of future capital flow, do you anticipate greater Israeli investment into India or Indian investment into Israel? Which industries are likely to dominate this inward-outward movement?
    
    We foresee significant Israeli investment into India, especially in capital markets. The robust growth of the Indian economy is getting a lot of interest from institutional investors in Israel, such as the leading companies managing pension and insurance. We have put our exchange authority in touch with SEBI to see how they could be better prepared to render services to those investors. The agreements I mentioned previously will no doubt increase the number of joint ventures in defence industries because there is dire need on both sides to create the capabilities to deal with mounting threats. Few months back we saw an Indian home appliances firm buying a majority stake in an Israeli electronics company with markets in the West.

• • What collaboration models-co-development, co-production, tech transfer, startup incubation, or research clusters-offer the highest impact for strengthening bilateral industry ties?
    
    The most impactful models include co-production and a rising level of localization of manufacturing and maintenance; tech-transfer and incubator bridges that move Israeli startups into Indian scale-up mode; and research clusters that connect Israeli and Indian innovation.

• • Aerospace is emerging as a frontier sector. What opportunities do you foresee for joint R&D, technology transfer, and co-production between Israeli and Indian aerospace firms?
    
    Aerospace offers exciting opportunities: small-satellites and constellations, avionics and sensors, UAV/autonomous systems, maintenance/repair-operations (MRO) services, and component manufacturing. Israeli expertise in sensors and autonomy paired with India’s manufacturing strength and launch/logistics capabilities can lead to jointly developed, globally exportable aerospace modules and services.

• • Defense cooperation remains a strong pillar. What new areas-beyond traditional hardware-are likely to define the next decade of India–Israel defense collaboration?
    
    Beyond traditional hardware in drones, missiles and radars, the next decade will be defined by software-heavy systems: AI-driven decision support, autonomous platforms, cyber-defence and secure communications. In addition, we expect expansion into training simulators, mission-support software, and dual-use platforms that straddle civilian and defence applications.

• • With India’s rapidly expanding civil aviation market, where do you see Israeli expertise contributing-whether in airport systems, security technologies, airspace management, or maintenance ecosystems?
    
    It’s important to mention that Israel can benefit from India’s robustness in building and maintaining airports. Israel will issue a tender to build an additional international airport and I hope Indian companies will compete and win the tender. Israel can contribute across the civil-aviation ecosystem: advanced screening and security systems for airports; sensor-fusion and surveillance for air-space management; predictive-MRO technologies for aircraft maintenance; and integrated command-centers for airport operations.

• • Artificial Intelligence and cybersecurity are strategic priorities. What joint initiatives can accelerate India–Israel cooperation in AI research, cyber readiness, and digital security?
    
    We have a joint research fund called I4F which already disbursed USD 25 million to partnerships in research from both countries in these sectors. There are smaller schemes introduced by the private sector. This year we hosted a high-level delegation on quantum technologies in order to enhance cooperation in this emerging technology. We are discussing building centers of excellence in cyber.

• • How can industry-to-industry cooperation be strengthened, especially between medium-sized companies and startups in both nations?
    
    On top of the agreements and joint R&D schemes we are discussing a concept of “Landing Pads” for Israeli high-tech companies in India. I hope this program will materialize soon.

• What reforms or facilitation mechanisms could unlock greater Israeli investments in India’s strategic industries-manufacturing, clean tech, water innovation, and agri-tech?
  
  Increasing the percentage of foreign ownership in defence ventures could accelerate Israeli investments. Signing the FTA will give a huge boost as well, because it will increase the mutual level of attention in each other’s markets and give an incentive to join hands in competing in third markets.

Innovation diplomacy has become central to global engagement. Can joint incubators, accelerators, or technology hubs play a larger role in shaping India–Israel ties?

Yes, absolutely. Incubators and accelerators from both countries are already in touch, but we can do more to bring together the innovation eco-systems. Israeli Universities have recently shown interest in joint innovation and have entered into contractual collaboration with Indian IIT’s and private universities’ innovation hubs.