India and Israel’s proposed free trade agreement (FTA) may be implemented phase-wise to ensure its benefits kick in sooner for the traders of both countries.
Commerce and Industry Minister Piyush Goyal, who is currently in Tel Aviv along with his 60-member delegation to meet leaders and businesses to discuss ways to boost bilateral trade and investments, said on Sunday that it is in the interest of both the countries to finalise the first phase of the two-phase FTA to ensure early benefits for the trade community of both countries.
“It is quite possible that we may come out with the first phase on an FTA, so that we can kickstart the benefits faster,” Goyal said, adding, “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.”
India and Israel inked the terms of reference (ToR) of the proposed FTA on November 20 to formally launch negotiations for the agreement.
The ToR 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, and easing norms to promote trade in services.
Also Read: India offers huge investment opportunities for Israel: Goyal
Meanwhile, the Union minister said he and his Israeli counterpart, Economy and Industry Minister, Nir Barkat, have agreed to first focus on “low-hanging fruit” in the FTA and not to touch upon sensitive issues yet.
Besides innovation and R&D, which can drive greater investments in each other’s countries, Goyal said work on joint projects had begun to leverage on the skill sets that both economies bring.
For instance, for a US 50 billion metro project in Israel, the country is keen to have Indian bidders on board, for which it has also come out with pre-qualification documents.
“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,” Goyal said, adding that Israel would “very seriously” like India to be a part of that project and “I hope Indian companies take interest and join the bidding process”.
The project involves 300 km of underground tunnelling and is one of the largest projects, he said.
Despite India being Israel’s second-largest trading partner in Asia, imports fell 26.2 per cent to USD 1.48 billion last fiscal year. India’s exports to Israel also dipped 52 per cent to USD 2.14 billion in 2024-25 from USD 4.52 billion in 2023-24. The bilateral trade stood at USD 3.62 billion.
Though merchandise trade between the two is dominated mainly by diamonds, petroleum products, and chemicals, recent years have witnessed an increase in trade in areas such as electronic machinery and high-tech products, communications systems, and medical equipment.
Major exports from India to Israel include pearls and precious stones, automotive diesel, chemical and mineral products, machinery and electrical equipment, plastics, textiles, apparel, base metals, transport equipment, and agricultural products.
Imports include pearls and precious stones, chemical and mineral/fertiliser products, machinery and electrical equipment, petroleum oils, and defence, machinery, and transport equipment.
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