When Narendra Modi lands in Israel on February 25 for a two-day visit, he will be doing far more than renewing a bilateral partnership. He will be walking into the epicentre of the most combustible geopolitical theatre of the moment—one where missiles, markets and moral narratives collide—and where India’s carefully cultivated West Asia balancing act faces its sternest test yet.
The timing is unmistakable. Modi’s visit comes days after the collapse of US–Iran nuclear talks, amid visible US military build-ups in the region and growing speculation of American strikes on Iranian nuclear facilities. That India’s Prime Minister is choosing this moment to stand beside Benjamin Netanyahu, address the Knesset, and deepen defence and technology cooperation is not diplomatic coincidence. It is strategic signalling.
The question is whether India is prepared to live with the consequences of that signal.
Modi’s first visit to Israel in 2017 broke decades of Indian hesitancy and marked a decisive warming of ties. This second visit is different in kind. It takes place not during regional calm but amid war in Gaza, international legal scrutiny of Israel’s leadership, and a looming US–Iran confrontation that threatens to destabilise the global economy.
Netanyahu has described the visit as evidence of a “tremendous alliance.” For him, Modi’s presence helps puncture Israel’s growing diplomatic isolation and confers international legitimacy at a moment when the International Criminal Court has issued warrants related to Israel’s conduct in Gaza. For India, however, the stakes are far higher—and far more complex.
India is no longer a distant observer in West Asia. It is a top energy importer, a major trading partner, a remittance-dependent economy, and an aspiring connector of continents through projects like the India–Middle East–Europe Economic Corridor (IMEC). Any regional escalation will land directly on India’s inflation numbers, current account balance and currency stability.
The Economic Sword Hanging Over New Delhi
India imports close to 90% of its crude oil, consuming about 5.5 million barrels per day. Over 40% of this oil transits the Strait of Hormuz, the narrow maritime artery Iran has repeatedly threatened to disrupt if attacked.
Oil markets have already priced in risk. Brent crude, hovering around $70–75 per barrel, carries a geopolitical premium even before a shot is fired. If tensions escalate into limited strikes, prices could easily climb to $90–100 per barrel. A Hormuz disruption—temporary or otherwise—could send prices beyond $120.
For India, every $10 rise in crude prices adds roughly $13–15 billion to the import bill, widens the current account deficit by 0.3–0.4 percentage points of GDP, and pushes inflation higher by up to 0.4 percentage points over subsequent quarters. A sustained oil shock of $30 would erase months of disinflation gains, weaken the rupee by 3–6%, and force the Reserve Bank of India into defensive mode just as growth momentum shows signs of softening.
This is the economic backdrop against which Modi is embracing a visibly closer alignment with Israel and, by extension, the United States security architecture in the region.
Strategic Confidence or Strategic Overreach?
Supporters of the visit argue that Modi is projecting confidence—that India refuses to be paralysed by volatility and is asserting itself as a consequential power. They are partly right. By travelling to Israel even as US carrier strike groups move into position, Modi is signalling that India does not outsource its foreign policy to regional turbulence.
But confidence is not the same as insulation.
India’s relationships in West Asia are not interchangeable. Israel is a critical defence and technology partner, with bilateral trade around $10 billion and deep cooperation in missiles, drones, cyber security and intelligence. Joint production of systems such as SPICE precision-guided munitions and LORA ballistic missiles strengthens India’s defence self-reliance.
Yet Iran remains geopolitically consequential—not as a defence partner, but as a node in India’s continental connectivity strategy and a lever in balancing Pakistan and China. Gulf Arab states are even more vital, hosting over nine million Indian workers who send home more than $110 billion annually, nearly 40% of India’s total remittance inflows.
A regional war triggered by US–Iran hostilities would jeopardise all three pillars simultaneously: energy security, remittance flows and trade routes.
The “Hexagon Alliance” Trap
Netanyahu’s vision of a “hexagon alliance”—linking Israel, India, Greece, Cyprus and select Arab or African partners to counter both Sunni and Shia “radical axes”—may appeal to Western strategists, but it sits uneasily with India’s interests.
Such framing risks collapsing India’s nuanced diplomacy into an overtly anti-Iran posture, alienating not only Tehran but also countries like Türkiye and Qatar, which play outsized roles in energy markets and regional mediation. For a country that still champions “strategic autonomy,” joining ideological blocs would represent a sharp departure from tradition—and one that markets may punish before diplomats applaud.
The Moral Cost and the Global South Question
There is also a reputational price. India has historically positioned itself as a voice of the Global South, emphasising sovereignty, restraint and civilian protection. Modi’s embrace of Netanyahu at a time when Gaza remains under intense international scrutiny risks eroding that moral capital.
India officially supports a two-state solution. Yet symbolism matters in diplomacy, and a Knesset address amid allegations of war crimes will be read globally as tacit endorsement—especially in Arab capitals and parts of Africa and Asia where public opinion on Gaza is overwhelmingly critical of Israel.
Soft power, once lost, is not easily rebuilt.
So, What Are India’s Real Options?
India does not have the luxury of choosing between Israel and the Arab world, or between Washington and Tehran. Its options are narrower—but still meaningful.
First, India must treat energy security as national security. Strategic petroleum reserves must be expanded rapidly, diversification accelerated even at higher cost, and contingency planning assumed to be necessary, not hypothetical.
Second, diplomacy must shift from posture to de-risking. India should quietly work with Gulf states, Europe and even Russia to push de-escalation and keep Hormuz open. Public alignment helps little; private leverage matters more.
Third, economic policy must assume shock. The RBI and the finance ministry should plan for oil at $100+, currency volatility and delayed monetary easing. Denial is costlier than preparation.
Finally, India must protect its diaspora. Evacuation advisories for Indians in Iran are an early warning. Similar planning across the Gulf must be treated as macroeconomic insurance, not humanitarian optics.
Modi’s Israel visit is not a routine diplomatic stop. It is a stress test of India’s West Asia doctrine at a moment when geopolitics and macroeconomics are colliding with unprecedented force.
If managed with realism, restraint and preparation, the visit could reinforce India’s image as a steady, consequential power capable of engaging all sides without being consumed by conflict. If handled with overconfidence or ideological alignment, it risks dragging India into a regional storm whose economic costs it is ill-equipped to absorb. History will judge this visit not by handshakes or speeches, but by whether India emerges from the coming turbulence more resilient—or more exposed.