India and Israel have officially begun negotiations for a free trade agreement, with the signing of the terms of reference (ToR), according to Commerce and Industry Minister Piyush Goyal. The ToR outline the removal of tariffs and non-tariff barriers for goods, investment facilitation, simplified customs procedures, enhanced cooperation in innovation and technology transfer, and relaxed norms for trade in services. Goyal announced that the negotiations will commence soon, as he leads a 60-member business delegation to Israel to strengthen bilateral trade and investment ties.
The proposed agreement aims to benefit sectors such as IT and tourism, as well as the mobility of professionals, including doctors, engineers, and nurses. Both nations will create a framework to facilitate the movement of these professionals.
Goyal signed the ToR with Israeli Minister Nir Barkat, who assured that Israel won’t seek market access in sensitive sectors such as dairy, rice, wheat, and sugar. Israel also issued pre-qualification documents for a USD 50 billion metro project open to Indian companies, expanding India’s metro networks across over 20 cities.
India and Israel have been negotiating a similar free trade agreement since 2010, with eight rounds of talks held before stalling, the last being in October 2021. Goyal emphasized that sensitivities from both sides will be excluded from the deal, aiming for a mutually beneficial agreement.
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Trade between India and Israel has fluctuated, with India’s exports dropping 52% to USD 2.14 billion in 2024-25 from USD 4.52 billion the previous year. Imports fell 26.2% to USD 1.48 billion. Despite this, bilateral trade was USD 3.62 billion, with Israel as India’s second-largest Asian trading partner, mainly in diamonds, petroleum, and chemicals.
Goyal said the Free Trade Agreement will improve market access, facilitate capital flow, and clarify business operations. Following a bilateral investment treaty in September, India shortened the remedies period for Israeli investors from 5 to 3 years. From April 2000 to June 2025, India received USD 337.77 million in FDI from Israel.
