India to Pursue Free Trade Agreement with Israel
India–Israel FTA Talks Restart
On November 21, Israel’s Minister of Economy and Industry, Nir Barkat, announced that the proposed Free Trade Agreement (FTA) between India and Israel will create significant business opportunities for industries of both nations and strengthen bilateral trade and investment.
On November 20, both countries signed the Terms of Reference (TOR) to formally begin negotiations. Barkat confirmed that sensitive sectors will not be included in the FTA discussions.
Huge Potential for Trade and Investment
Speaking to PTI, Barkat stated that India and Israel have vast untapped potential for boosting trade and investment. Several Israeli companies are interested in establishing subsidiaries in India, viewing it as a gateway to the Asian market.
He added that global perception about India has changed significantly: “People now realize that India offers massive opportunities and is no longer the India of the past.”
Barkat also noted that India is in a strong position to compete with China in multiple sectors.
Key Elements of the TOR
The TOR includes the following objectives:
- Removing tariff and non-tariff barriers to improve market access
- Facilitating investment between the two countries
- Simplifying customs procedures
- Cooperation in innovation and technology transfer
- Enhancing trade in services by easing regulatory norms
Past Negotiations and Trade Data
India and Israel have been exploring an FTA since May 2010, but talks stalled after eight negotiation rounds. The last discussion took place in October 2021.
In FY 2024–25, India’s exports to Israel declined sharply by 52%, dropping from USD 4.52 billion (2023–24) to USD 2.14 billion. Imports from Israel also fell by 26.2% to USD 1.48 billion, taking the total bilateral trade to USD 3.62 billion.
India – Israel Trade Composition
India is Israel’s second-largest trading partner in Asia. Major traded items include:
Key Trade Components
- Diamonds and precious stones
- Petroleum products and chemicals
- Electronic machinery
- High-technology equipment
- Communication systems
- Medical devices
India’s major exports to Israel include pearls & gemstones, diesel for motor vehicles, chemical & mineral products, machinery & electrical equipment, plastics, textiles, apparels, base metals, transport equipment, and agricultural products.
In September, both nations signed a Bilateral Investment Agreement (BIA), reducing India’s local processing time for Israeli investors from five years to three years. Israel became the first OECD member with whom India signed such an agreement.
Between April 2000 and June 2025, India received USD 337.7 million in FDI from Israel.