The three day visit starting Wednesday is the first ever by an Indian PM to the nation and is widely expected to hinge on greater cooperation in bilateral defence ties owing to India's position as the largest purchaser of Israeli arms and defence technology.
However, India will also push hard to increase trade and investments with the nation which have remained static in spite of greater connections between the private sector in both countries in recent years.
Talks are expected to focus on how to colaborate on the lucrative diamond polishing and processing trade, a senior government official said under conditions of anonymity.
Bilateral trade stood at $5.02 billion in 2016-17, rising 2.3 per cent in 2016-17 after four consecutive years of fall.
This involves $3.06 billion of exports and $1.96 billion of imports. Of this, raw non-industrial diamonds figure significantly on both sides of trade, contributing more than a billion dollars to both imports and exports.
While India is the largest exporter of polished diamonds in the world, sending out more than 75 per cent of the world supply, Israel is the second largest.
Israel, for long the top exporter of the shiny stone to the United States — the world's largest market for diamond — has recently been overtaken by India.
"Israel has high manufacturing costs which are prompting their firms to send over small raw diamonds to India for processing", Praveen Shankar Pandya, Chairman of Gems and Jewellery Export Promotion Council said.
In the absence of a job working policy, the country is losing out on these contracts which are moving to China and Vietnam, he added.
A job working policy allows consignments of a particular good to be shipped to another country to be worked upon, after which they are sent back. Labour charges are paid by the primary country.
The Middle Eastern nation relies heavily on diamond exports which make up nearly 24 per cent of its export kitty by value.
Better sourcing norms for phosphates, crucial to the energy sector is also being sought by India which receives more than 20 per cent of the mineral from the middle eastern nation.
A joint business council has been created for the first time which is looking at expanding the scope of bilateral trade, Pankaj Patel, President of industry body Ficci said.
While nearly all industries are covered as part of discussions, irrigation, agriculture, pharmaceuticals, healthcare, infrastructure and IT enabled sectors are the focus, he added.
On the investment front, Israel currently has investments over upwards of $122 million in India. "While the figures are relatively small owing to the investing companies mostly being mid-sized, the investment footprint is magnified owing to the projects being specialized and heavily tech based." a senior government official said.
According to diplomatic sources, mid level companies in these sectors such as solar are looking to partner with Indian players.
Likewise, Indian companies are interested in teaming up with their Israeli counterparts for research and development (R&D). On this note, the countries are also set to formalize an agreement to create a $40 million joint fund for boosting industry relations which will focus on setting up of innovation centres.
While both countries will burden half the cost over the next 5 years, the figure will be split equally between the government and the private sector.
Talks on the proposed India-Israel Free Trade Agreement may also gather steam during the visit. The agreement had been pushed hard by Israeli President Reuven Rivlin during his visit to India back in 2016.
"Although the first round of negotiations had taken place back in May, 2010, the government is taking it slow since we are already involved in a number of similar negotiations," the official mentioned above said.