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Executive Summary

India has been the structural anchor of Israel's defence-export economy for over a decade. In the SIPRI five-year period 2021–2025, the most recent published dataset, India absorbed 29 percent of Israeli arms exports by volume (SIPRI, Trends in International Arms Transfers 2025, March 2026), with an estimated cumulative contract value of USD 20.5 billion across 2020–2024 (BGen. (Res.) Yair Kulas, SIBAT, via Jerusalem Post, February 24, 2026). This share peaked above 42 percent in the period since Prime Minister Modi took office in 2014 (Middle East Eye, July 2024), reached approximately 45 percent in 2015–2019 (SIPRI, Trends in International Arms Transfers 2019, March 2020), and stood at 34 percent in the partially overlapping SIPRI 2020–2024 period (SIPRI, Trends in International Arms Transfers 2024, March 2025). The latest 2021–2025 SIPRI period records India at 29 percent, with Germany rising to 21 percent on the back of the Arrow-3 mega-deal, reflecting continued European denominator expansion rather than any absolute Indian volume contraction (SIPRI, March 2026).[1][2][3][4][5]

Israel is now the world's seventh-largest arms supplier, rising above the United Kingdom for the first time, with a 4.4 percent global share and 56 percent export growth compared with 2016–2020 (Jerusalem Post, March 10, 2026). Israel's total defence exports reached a record USD 14.8 billion in 2024, the fourth consecutive record-breaking year (Israeli Ministry of Defense / SIBAT official press release, June 2025). On the Indian side, Russia's share of Indian arms imports fell further to 40 percent in 2021–2025, down from 51 percent in 2016–2020 and 70 percent in 2011–2015, creating structural space that France (29 percent) and Israel (15 percent) have filled (The Wire, reporting on SIPRI 2025 data, March 8, 2026).[6][7][8]

The relationship evolved from discrete arms transactions into a deeply integrated defence-industrial ecosystem, and in 2025–2026 entered a qualitatively new phase of acceleration. Five developments define this acceleration: the operational baptism of Israeli-origin systems during the May 2025 India-Pakistan conflict (Operation Sindoor) (DRDO official release, May–June 2025); PM Modi's announcement of Mission Sudarshan Chakra, India's multi-layered missile defence shield, which explicitly identifies Israeli technology as a key enabler (IDSA Issue Brief, March 5, 2026); the Defence Cooperation MoU of November 4, 2025 (Middle East Observer, November 9, 2025); the USD 8.6–8.7 billion precision-strike package approved by the Defence Acquisition Council in late 2025/early 2026 (Indian Defence News, February 16, 2026); and the elevation of the bilateral relationship to a "Special Strategic Partnership for Peace, Innovation and Prosperity" during Modi's state visit on 25–26 February 2026 (MEA India Joint Statement, February 26, 2026).[9][10][11][12][13]

Four forward scenarios are assessed: Scenario A ("Steady State" — 45–50% probability), Scenario B ("Managed Diversification" — 30–35%), cenario C ("Strategic Fracture" — 10–15%), and Scenario D ("Defence-Industrial Convergence" — 10–15%).