Gems and jewellery, along with electrical machinery, remain key in the trade between India and Israel. However, the arms and ammunition sector has experienced significant growth over the past ten years.

While Israel's exports to India have decreased, a recent analysis by Moneycontrol reveals that the arms and ammunition trade between the two nations has surged by 33 times between 2015 and 2024.

In 2024, the weapons trade between New Delhi and Tel Aviv reached $185 million, a substantial rise from $5.6 million in 2015. The peak year was 2023, with bilateral arms trade hitting $265 million.

The majority of this trade involves imports by India, one of the world's largest arms purchasers. Israel exported $168,000 worth of arms to India in 2015, which increased to $135 million in 2023 before dropping to $128 million in 2024.

By 2024, arms and ammunition became the second-largest import from Israel after electrical machinery. This category was not even among India's top 10 imports from Israel until 2020.

India primarily sources military equipment from Russia, the United States, and France.

Impact of Israel-Iran Conflict on India's Trade

Although Israel accounts for a small portion of India's overall trade at $3 billion out of $1,160 billion, any disruption in shipping routes could have significant consequences for New Delhi's exports.

The Strait of Hormuz is a crucial shipping lane through which nearly 20% of the world's oil flows. Experts warn that a full-scale conflict between Israel and Iran could lead to the closure of this vital strait.

Israel conducted coordinated attacks on Iranian territory in June 2024, targeting nuclear facilities and senior military figures in Tehran. Prime Minister Benjamin Netanyahu emphasized that the operation was crucial for Israel's survival.

In retaliation, Iran reportedly deployed over 100 drones. India's trade with Israel began to decline in 2023, with exports falling from $7.6 million in 2022 to $2.1 million in 2024.

Explosives, base metals, and machinery, including smartphones, saw an increase in exports. Explosives exports surged by 200% in 2018, while electrical machinery exports rose by 18%.

Imports also decreased significantly, from $2.8 billion in 2022 to $1.3 billion in 2024. The composition of imports shifted, with consumer goods accounting for 17.8% in 2024, up from 4.7% in 2015.

Despite the fluctuations, India's exports to Israel have outpaced imports. Israel's share in bilateral trade dropped to 31.5% over the past four years, down from 36.5% pre-Covid and 38.9% during 2011-2015.