India and Israel are set to kick off negotiations for a long-awaited Free Trade Agreement (FTA), adopting a two-phase rollout strategy designed to deliver immediate advantages to businesses in both countries. Speaking during an official visit to Israel, Commerce and Industry Minister Piyush Goyal announced that both sides are determined to finalize the first stage swiftly, emphasizing the importance of “early wins” for the business community. The phased approach aims to implement easier tariff reductions and trade facilitation measures ahead of a broader and more comprehensive pact.
The move follows the recent signing of the Terms of Reference (ToR) that formally launch FTA negotiations. The agreement will cover a wide range of areas including tariff rationalization, easing non-tariff barriers, investment promotion, customs simplification, and deeper cooperation in innovation and technology transfer. Officials from both countries have agreed to prioritize quick, mutually beneficial outcomes while avoiding contentious issues in the initial stage of talks.
During his visit, Goyal led a 60-member delegation of Indian industry representatives and highlighted the potential for partnerships in cutting-edge technology, research, and development. Israeli Minister of Economy and Industry Nir Barkat echoed this sentiment, saying the FTA would help combine India’s massive manufacturing capacity with Israel’s innovation-driven ecosystem. Both sides see opportunities in fields like high-tech manufacturing, defense technology, and pharmaceuticals.
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Goyal also pointed to a major infrastructure prospect for Indian companies: Israel’s ambitious USD 50 billion Tel Aviv metro project. The massive urban transport initiative spans nearly 300 kilometers of underground tunnels, and Israel has invited global bidders, expressing interest in participation from Indian engineering and construction firms. Given India’s extensive metro network development experience—currently underway in 23 cities—the collaboration could further strengthen infrastructure ties.
Despite optimism about the trade agreement, bilateral trade has contracted sharply in the current fiscal year, signaling the urgency for renewed commercial momentum. India’s exports to Israel have fallen by 52 percent to USD 2.14 billion in 2024–25, while imports dropped by 26.2 percent to USD 1.48 billion, bringing total trade to USD 3.62 billion. Nevertheless, India remains Israel’s second-largest trading partner in Asia. Officials on both sides are confident that the proposed FTA will help reverse the downturn and open new frontiers in trade, innovation, and investment.
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