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India, Israel expand cooperation from defense to science, agriculture and technology

  • India and Israel signed agreements on science, agriculture and technology as part of Narendra Modi's visit to the Middle Eastern country
  • Defense had been a key driver of Indian-Israeli cooperation
  • The countries agreed to create a bilateral technology innovation fund worth $40 million

Defense ties have long underpinned Indian-Israeli relations, but a string of deals signed this week reflected wider cooperation that could benefit Indian companies seeking advanced technologies and could pave the way for Israeli firms to access millions of consumers.

On Wednesday, the Indian Ministry of External Affairs said India signed several agreements with Israel on science, agriculture and technology, as part of Prime Minister Narendra Modi's historic visit to the country, 25 years after both nations established diplomatic relations.

The agreements included the decision to create a bilateral technology innovation fund worth $40 million for research in industrial development, and to establish a strategic partnership in water and agriculture to focus on water conservation, waste-water treatment and its reuse for agriculture and desalination, among other deals.

Richard Rossow, senior adviser and Wadhwani Chair in U.S.-India Policy Studies at CSIS, said that while Israel has historically been a supplier of defense equipment to India, the two countries have natural synergies in other areas.

"Israel's becoming a more important defense partner for India, a source of great technology, not just in the defense space, but in biotechnology (and) agriculture," he told CNBC's "Street Signs" on Thursday. "A lot of the things were reflected in that joint statement."

Rossow said that closer ties could lead to more investments from both countries.

"India's good at large-scale things, like call centers and software development, but Israel's doing package software. India's doing back-office biotech research, but Israel actually has products that are out there in the global markets more than India does," he said.

"So it could be Israeli companies looking for a larger production base, in which case India's ready to go."

Israel's Prime Minister Benjamin Netanyahu (R) and Indian Prime Minister Narendra Modi (L) hold a joint press conference following their meeting in Jerusalem on July 05, 2017.
Anadolu Agency | Getty Images
Israel's Prime Minister Benjamin Netanyahu (R) and Indian Prime Minister Narendra Modi (L) hold a joint press conference following their meeting in Jerusalem on July 05, 2017.

On the flip side, Rossow said Indian companies looking to get access to higher-end technologies than what was available domestically could then make acquisitions in Israel. "It's a good complementary relationship between the two countries," he said.

India and Israel also signed cooperation pacts between their respective space agencies in areas including atomic clocks and electric propulsion for small satellites.

Defense, however, remained a key factor in the India-Israeli relationship. Israeli companies, led by government-owned aerospace giant Israel Aircraft Industries, have signed arms deals with India totaling over $2.6 billion earlier this year.

"The defense relationship has been the main driver of the rapprochement between India and Israel," Nicolas Blarel, assistant professor at the Institute of Political Science in Leiden University, told CNBC's "Capital Connection" on Wednesday.

"Israel was one of the main suppliers for India during the Kargil war with Pakistan. It showed its reputation as a strong, stable supplier, even in times of duress. So since then, there have been a lot of major, important deals," said Blarel.

According to the joint statement, future developments in defense cooperation between the countries should focus on joint development of defense products that include transfer of technology from Israel, with an emphasis on Modi's signature 'Make in India' initiative.

India was one of the largest defense spenders in Asia. Data from the Stockholm International Peace Research Institute showed that in 2016, 2.5 percent of India's gross domestic product (GDP) went to military expenditure. By comparison, China spent about 1.9 percent of its GDP on its military in the same period.

Rossow said Israel has, over the years, become more comfortable equipping India with weapon systems that may be employed against its neighbor Pakistan — more so than the United States, which he said was looking to "equip India more for maritime domain activity."

Sources of friction between India and Pakistan usually center around terrorism and the contested region of Kashmir.

Pivoting more toward India could also be a strategic move for Israel, according to Blarel.

"Support from Western Europe, the U.S. is not as strong as it used to be. So showing the strong relationship with an important emerging Asian power is also quite symbolic," he said.