India and Israel signed the Terms of Reference (ToR) to initiate formal talks on a Free Trade Agreement (FTA). The development was announced by the Commerce and Industry Minister, Piyush Goyal, when he visited Israel.
He stated that both parties are trying to set the dates of the initial round of negotiation immediately. The ToR provides a list of the areas that the proposed agreement will address. These are access to goods in the market, reduction of tariffs, simplification of customs, and ease of investment. It also incorporates collaboration in terms of technology transfer and services trade precautionary measures.
Goyal took a 60-member Indian business delegation to Israel. He also conducted conferences with the government officials and business organisations to enhance bilateral trade and investment relationships. According to him, the benefits of the upcoming agreement are substantial in such sectors as information technology, tourism, and the movement of skilled workers.
The two nations intend to facilitate the migration of skilled workforce, such as engineers, nurses, and doctors. According to Goyal, India and Israel desire to establish a systematic channel through which these workers can transfer without any hassle. The signing of the ToR was done in the presence of the Israeli Economy and Industry Minister Nir Barkat. He assured that Israel will not demand access to sensitive Indian sectors like dairy, rice, wheat, and sugar. India has done the same thing towards the Israeli sensitive areas.
Goyal mentioned that Israel has already issued pre-qualification documents for a major metro project. The project is estimated to have a USD 50 billion budget. He advised Indian companies to seek opportunities in this development.
In recent years, there have been changes in trade between India &Israel. In 2023–24, India's exports to Israel were valued at $4.52 billion, whereas in 2024–25, it was $2.14 billion. The imports also dropped to $1.48 billion in the same period. The overall extent of trade was $3.62 billion.
Diamonds, chemicals, petroleum goods, machinery, textiles, and high-tech machinery dominate bilateral trade. The FTA is expected to enhance transparency, cut business barriers, and provide certain predictability in trade for both sides. Israel is still the second-largest trading partner of India in the Asian region. Barkat estimated that bilateral trade would increase ten times with the FTA. Goyal also said that trade would increase to $30- $40 billion in five years, provided that both parties fulfil their agreement on time.