Why PM Modi is betting on IMEC, I2U2 to deepen India–Israel ties

Modi reiterated on February 26 that India and Israel would expedite negotiations on a bilateral FTA

• India and Israel to boost IMEC and I2U2 regional initiatives
• Bilateral ties elevated to a special strategic partnership
• FTA talks underway to expand trade and technology cooperation

Did our AI summary help?

Prime Minister Narendra Modi on February 26 said India and Israel would inject fresh momentum into regional connectivity initiatives, including the India-Middle East-Europe Economic Corridor (IMEC) and the four-nation grouping of India, Israel, the US and the UAE (I2U2).

Addressing a joint press conference with Israeli Prime Minister Benjamin Netanyahu, Modi said the two countries would “move forward with new speed” under IMEC and I2U2 to strengthen regional integration.

Modi, who is on a two-day visit to Israel and addressed the Knesset on February 25, also announced that the two sides have decided to elevate bilateral ties to a “special strategic partnership”. He added that negotiations for a mutually beneficial free trade agreement (FTA) would be concluded soon.

IMEC, I2U2 and the strategic push

The IMEC initiative, announced in 2023 with the backing of the US, India, UAE, Saudi Arabia, France, Italy, Germany and the European Union, seeks to establish a sustainable, high-efficiency trade corridor spanning three continents. Widely seen as a counterweight to China’s Belt and Road Initiative, IMEC could significantly deepen India’s engagement with Israel while providing a faster gateway to Europe.

Netanyahu says he owes India a ‘great personal debt’, hails PM Modi's 'amazing visit'

Under the proposed framework, goods would travel by sea from India to the Gulf, then move via rail across the Middle East to Israeli ports before onward shipment to Europe. The corridor is expected to lower logistics costs, cut transit time and reduce dependence on the Suez Canal, while opening new avenues for joint ventures and business collaboration between Indian and Israeli firms.

For New Delhi, the initiative also strengthens its strategic footprint in West Asia, where it has expanded ties with the UAE and Saudi Arabia in recent years. Enhanced connectivity with Israel could help diversify export markets at a time of uncertainty surrounding US trade policies.

The I2U2 grouping, formally launched in 2022, focuses on economic cooperation, technological innovation and regional stability. It is expected to bolster India’s integration into regional supply chains while facilitating Israel’s deeper economic engagement with its neighbourhood.

Foreign secretary Vikram Misri, during a separate press briefing in Jerusalem, announced that Modi and Netanyahu discussed IMEC at “some length”. However, he said the regional situation determine the progress of the initiative. Misri said countries are working on parts of IMEC in their national capacities, which will contribute to the corridor as a whole.

Moreover, Misri said despite Israel not being a formal member of IMEC, it is till a very important actor in the success of the initiative. “Israel, even though it is not a formal member of IMEC at present, is potentially a very important actor in the success of this corridor. We aim to remain engaged with Israel and with all the other parties to see how we can realise its full potential."

Trade and FTA talks

Modi reiterated on February 26 that India and Israel would expedite negotiations on a bilateral FTA. He also said the two countries would pursue joint development, production and technology transfer in defence.

PM Modi endorses Gaza peace plan in Israel, says humanity must not become victim of conflict

The first round of FTA negotiations began in New Delhi on February 23 and is set to conclude on February 26. The Terms of Reference were signed during commerce and industry minister Piyush Goyal’s visit to Israel in November 2025, formally launching the talks.

Bilateral merchandise trade between India and Israel stood at $3.62 billion in FY2024–25. With complementarities across sectors ranging from technology to manufacturing, the proposed FTA is expected to provide greater predictability and certainty to businesses, including MSMEs, and serve as a catalyst for expanding trade ties.