When Narendra Modi and Benjamin Netanyahu stood together in Jerusalem on February 26 to announce a “Special Strategic Partnership for Peace, Innovation and Prosperity,” the framing was deliberately expansive — sixteen agreements spanning artificial intelligence, agriculture, cybersecurity, fintech, labour mobility and academic exchange. Five months on, almost every pillar of that framework has been tested by exactly the kind of regional volatility the partnership was meant to transcend. The US-Israel war with Iran that began two days after Modi departed Tel Aviv has stalled the flagship connectivity corridor, forced New Delhi into an uncomfortable retreat on Chabahar, and put Indian workers back in the path of missiles. The upgrade was real. So were the costs of timing it the way India did.
From elevation to execution
The February visit was substantive, not just ceremonial. Modi and Netanyahu signed pacts covering an India-Israel Innovation Centre for Agriculture, a UPI-linked cross-border remittance corridor between India’s NPCI International and Israel’s MASAV, fintech cooperation between the two countries’ securities regulators, and — notably — three separate labour-mobility protocols opening Israel’s commerce, manufacturing and food-service sectors to regulated Indian recruitment. The two leaders explicitly invoked their 2017 and 2018 visits as groundwork, framing 2026 as the point where a “transactional” defense relationship became an enduring strategic one.
The timing, however, was not incidental. The elevation came as Israel and the United States were completing a military buildup against Iran, and Netanyahu had met Trump at the White House earlier that month specifically on the Iran question. Jerusalem Post analyst Dagan Amoss has argued that India had begun repositioning Israel from arms supplier to broad strategic partner even before the war started — meaning the Special Strategic Partnership was less a response to the coming conflict than a bet made just before it, one that New Delhi has spent the subsequent months managing the consequences of.
Defense: From buyer to co-producer, with new friction
The core of the relationship has moved further toward local production. Adani Defence & Aerospace’s joint venture with Elbit Systems in Hyderabad — which manufactures the Hermes 900 as the “Drishti-10 Starliner” — has pushed indigenisation to roughly 70-80 percent of the platform, according to Adani Enterprises Vice President Jeet Adani. More significantly, Rafael is reportedly set to begin producing Iron Dome interceptors in India, according to the Jerusalem Post, which would mark a substantial deepening beyond drone and missile assembly into core air-defense manufacturing — precisely the kind of “co-production over procurement” shift the relationship has been oriented toward since Atmanirbhar Bharat became policy.
That deepening has generated a domestic backlash absent from the pre-war relationship. Since the Iran war began, Pakistani propaganda networks and some Indian commentators have circulated fabricated claims that senior Indian officials admitted to aiding Israeli strikes on Iran, and protests have targeted the Hyderabad facility directly over its role supplying a combatant in an active regional war — a reputational exposure that co-production locations inside India did not carry when Israeli arms were simply imported.
Trade: The one track still moving on schedule
Amid the disruption elsewhere, the commercial track has been the most consistent performer. Talks on a comprehensive Free Trade Agreement — under a Terms of Reference signed in November 2025 — opened their first round in New Delhi the same week as Modi’s Israel visit, and concluded a second round on July 23, covering goods, services, rules of origin, IP and customs facilitation. India’s chief negotiator, Ajay Bhadoo, and Israel’s Yifat Alon Perel both described the talks as “constructive,” against a backdrop of bilateral merchandise trade that reached $3.93 billion in FY2025-26. Unlike IMEC or the labour framework, the FTA process has not visibly slowed despite the war — a sign that the two governments have deliberately insulated the purely bilateral economic track from the regional turmoil surrounding it.
Labor mobility: The human exposure behind the numbers
As of mid-2025, roughly 6,774 Indian workers had arrived in Israel under the November 2023 bilateral framework agreement, filling gaps in construction and agriculture left by the suspension of Palestinian work permits — figures the government confirmed in a parliamentary reply that also disclosed one Indian worker’s death and three injuries from Hezbollah and Hamas fire since October 2023. The Iran war has widened that exposure. Israeli labour-rights group Kav LaOved has documented that migrant workers in agriculture, construction and residential care are disproportionately killed in missile strikes precisely because their jobs keep them outside shelters when alerts sound — a pattern that held through the March 2026 Iranian missile barrages, which killed foreign nationals including at least one Indian agricultural laborer alongside Thai and Filipino workers. Unlike the 2024 death of a Kerala worker in a Hezbollah strike, which drew a formal high-level Israeli condolence visit, the Iran-war casualties among foreign workers have registered mainly as a data point in broader wartime civilian tallies — a reminder that as India’s labour-export numbers scale up, so does the constituency back home whose grief becomes New Delhi’s political problem.
IMEC: The corridor the war paused
The India-Middle East-Europe Economic Corridor — the connectivity project meant to anchor the partnership’s regional ambitions — has been the most visible casualty. IMEC was already limping after two years of Gaza-related delay when the February 2026 Iran war closed off the Gulf transit route it depends on almost entirely. The Middle East Institute’s spring 2026 assessment, authored by Walter Murdoch with input from senior fellow Karen E. Young, found that as of May 2026 the corridor had no firm funding commitments or construction timeline, and that renewed European interest — driven partly by the war’s demonstration of Strait of Hormuz vulnerability — has not translated into capital. A separate TRENDS Group analysis goes further, arguing that IMEC’s recovery is now complicated not only by regional war but by friction in the India-US relationship itself, meaning the corridor’s revival depends on a “phased,” Gulf-led approach through 2030 rather than the near-term breakthrough both governments discussed in February.
The widening Chabahar fault line
The most consequential fallout has been in India’s relationship with Iran. New Delhi’s decades-long strategy of “strategic autonomy” — deepening ties with Israel while keeping Chabahar Port operational as a hedge and a gateway to Afghanistan and Central Asia bypassing Pakistan — held reasonably well in peacetime. It came apart once the shooting started. When the US and Israel struck Iran in late February, India’s response was calls for “restraint” and “de-escalation” that named no aggressor, a position that drew domestic criticism from opposition figures who called it capitulation to US pressure. The costs were concrete: Iran’s near-total blockade of the Strait of Hormuz disrupted an estimated 46-50 percent of India’s crude imports and roughly 90 percent of its LPG imports. Reporting since indicates India has begun winding down its Chabahar stake, transferring it to an Iranian entity under informal — not legally binding — assurances of reversibility, a move Atlantic Council South Asia analyst Michael Kugelman has described as leaving Chabahar “a damaged asset,” warning that a full Indian exit creates an opening China is well placed to fill given its own sanctions tolerance and the port’s proximity to Chinese-backed Gwadar.
Compounding this, reports that Israel has deployed Iron Dome batteries to the UAE during the war have raised a separate question analysts are now debating openly: whether the Abraham Accords security architecture is hardening from a diplomatic framework into an actual military bloc. If so, India’s position — simultaneously supplying Chabahar, buying Israeli air-defense technology, and anchoring trade through the UAE — stops looking like sophisticated multi-alignment and starts looking like exposure on all sides of a fracturing region.
Palestine: The dissonance that predates and outlasts the war
The ideological gap the original briefing flagged has, if anything, sharpened. On July 29, India’s UN envoy P. Harish told the Security Council — speaking in Arabic — that India backs a two-state solution granting Palestinians “a sovereign, independent and viable” state, alongside a $175 million development pledge. This is continuous with India’s vote for the 142-nation “New York Declaration” in September 2025 and its repeated support for Palestinian UN membership bids that Washington has vetoed. Netanyahu’s government has been equally consistent in the opposite direction, declaring flatly that “there will be no Palestinian state.” Neither side shows sign of narrowing this gap, and neither government appears to expect the other to — it has become a stable, managed disagreement rather than a live point of negotiation, coexisting with expanding defense and trade ties in a way that would have seemed contradictory in earlier decades of India-Israel relations but is now simply how the partnership functions.
What to watch
Three threads will determine whether the “Special Strategic Partnership” label matures into something durable or remains a February 2026 press moment overtaken by events. First, whether the FTA — the one track still on its original timeline — reaches conclusion before regional conditions deteriorate further. Second, whether Chabahar’s “temporary” wind-down hardens into permanent Indian exit, which would mark the clearest sign yet that Israel alignment has real costs for India’s other regional relationships. Third, whether IMEC gets a genuine capital and construction commitment or remains, as MEI’s assessment puts it, a project whose “world has changed significantly since its original conception” — a corridor perpetually revived in statements and stalled in practice.
