HIGHLIGHTS

• India and Israel may implement the FTA in two phases for early trade gains.

• Terms of reference signed on Thursday to launch formal negotiations.

• Both sides to prioritise low-hanging fruit and avoid sensitive issues in first phase.

• Israel wants Indian companies to bid for a USD 50 billion metro project in Tel Aviv.

India and Israel are considering implementing their proposed free trade agreement (FTA) in two phases to ensure early benefits for the trade community of both countries, Commerce and Industry Minister Piyush Goyal said on Sunday.

The two countries on Thursday inked the terms of reference (ToR) to formally launch negotiations for the agreement.

What the ToR for the proposed FTA includes

The terms of reference lay the groundwork for the negotiations and include:

• Market access for goods by eliminating tariff and non-tariff barriers

• Investment facilitation

• Simplification of customs procedures

• Increasing cooperation for innovation and technology transfer

• Easing norms to promote trade in services

Two-phase implementation under consideration

Goyal said the two countries are exploring a two-stage rollout of the agreement. “We are considering doing this in two tranches. A decision will be taken when the talks begin. Both ministers are keen to finalise the first phase early so that the trade community benefits sooner,” he said.

The minister is in Israel as part of a visit to meet leaders and businesses and is leading a 60-member business delegation.

He said he and Israeli Economy and Industry Minister Nir Barkat agreed to prioritise areas that can be concluded quickly. They have also decided not to touch the sensitive issues on both sides.

Goyal said both countries may explore collaboration in innovation and research. They may look at “how innovative and R&D can drive greater investments in each other’s countries, work on joint projects where we can leverage on their skill sets and they can leverage on the economies of scale in a large market like India”.

Goyal added: “It is quite possible that we may come out with the first phase on an FTA, so that we can kickstart the benefits faster.”

Big metro project in Israel: Indian firms encouraged to bid

During his visit, Goyal also highlighted opportunities for collaboration on infrastructure. Israel has released pre-qualification documents for a USD 50 billion metro project in Tel Aviv.

The project includes 300 km of underground tunnelling and is one of the largest infrastructure projects in the region.

Goyal said Israel is keen for Indian companies to participate. “We have several players, both in the public and private sectors, who have done massive works. We have 23 cities which are setting up metros in India,” he said.

He added that Israel would “very seriously” like India to be a part of the project and expressed hope that Indian companies will join the bidding.

Where India–Israel trade stands

During 2024-25:

• India’s exports to Israel fell 52 percent to USD 2.14 billion, down from USD 4.52 billion in 2023-24.

• Imports dropped 26.2 percent to USD 1.48 billion.

• Bilateral trade stood at USD 3.62 billion.

India remains Israel’s second-largest trading partner in Asia.

What India exports to Israel

Key exports include:

• Pearls and precious stones

• Automotive diesel

• Chemical and mineral products

• Machinery and electrical equipment

• Plastics, textiles, apparel

• Base metals, transport equipment

• Agricultural products

What India imports from Israel

Major imports include:

• Pearls and precious stones

• Chemical and mineral/fertiliser products

• Machinery and electrical equipment

• Petroleum oils

• Defence, machinery, and transport equipment

(With inputs from agencies)