India, Israel sign terms to begin FTA talks; negotiations to start soon

India and Israel on Thursday signed the terms of reference (ToR) to formally begin negotiations for a free trade agreement (FTA), Commerce and Industry Minister Piyush Goyal said.

The ToR cover market access for goods through the removal of tariff and non-tariff barriers, investment facilitation, simplification of customs procedures, cooperation in innovation and technology transfer, and easing norms to promote trade in services.

“We have signed the ToRs today. Now we will soon finalise the dates for starting the negotiations for that,” Goyal told reporters in Israel. Goyal, who is leading a 60-member business delegation, met political and business leaders to discuss ways to expand bilateral trade and investment.

India-Israel FTA will be a stepping stone to our shared prosperity. 🇮🇳🇮🇱 pic.twitter.com/BLChe6ulA1

— Piyush Goyal (@PiyushGoyal) November 20, 2025

He said the FTA will support services such as IT, tourism and the movement of skilled professionals, adding that both countries will create a bridge for professionals including doctors, engineers and nurses.

The ToR was signed by Goyal and Israeli Economy and Industry Minister Nir Barkat.

Goyal said Israel has conveyed it will not seek market access in sensitive sectors such as dairy, rice, wheat and sugar.

He also said Israel has issued pre-qualification documents for a metro project worth USD 50 billion (Rs 4.5 lakh crore), in which Indian companies will be able to participate. India currently has metro networks operating in more than 20 cities.

India and Israel had earlier negotiated an FTA beginning May 2010, holding eight rounds before talks stalled. The last round took place in October 2021.

“We have already agreed that whatever will be the sensitivities of Israel, India will keep out that from the agreement and similarly, whatever is sensitive for India, Israel will keep that. We want a win-win agreement for both the countries,” Goyal said.

During 2024–25, India’s exports to Israel fell 52 per cent to USD 2.14 billion from USD 4.52 billion in 2023–24. Imports declined 26.2 per cent to USD 1.48 billion. Bilateral trade stood at USD 3.62 billion. India is Israel’s second-largest trading partner in Asia.

While diamonds, petroleum products and chemicals dominate merchandise trade, recent years have seen rising exchanges in electronic machinery and high-tech products, communications systems and medical equipment.

India’s key exports to Israel include pearls and precious stones, automotive diesel, chemical and mineral products, machinery and electrical equipment, plastics, textiles, apparel, base metals and transport equipment, and agricultural goods.

Imports consist of pearls and precious stones, chemical and fertiliser products, machinery and electrical equipment, petroleum oils, defence items, machinery and transport equipment.

“The FTA will open the doors for greater market access, flow of capital, both in goods and services, remove obstacles in doing business, provide clarity and predictability to our economic engagement,” Goyal said.

In September, both countries signed a Bilateral Investment Agreement (BIA), under which India shortened the local remedies exhaustion period for Israeli investors from five years to three. Between April 2000 and June 2025, India received USD 337.77 million in FDI from Israel.

When asked about the potential boost from an FTA, Barkat indicated the possibility of a tenfold increase in trade. Goyal said the pact could push trade to USD 30–40 billion over the next five years.

Barkat said he would like Israeli companies to invest in India, which he said could become a regional base for Israeli firms operating across Asia. “India is one of the best friends that Israel has around the world,” he said, adding that Israel has technologies that can raise productivity and could share them with India.

He added that Israeli companies see the potential in India and “we have to make the ecosystem simple.”

(With inputs from agencies)