India and Israel have initiated formal negotiations for a Free Trade Agreement (FTA) by signing Terms of Reference in Tel Aviv on 20 November 2025, signalling a strategic escalation in bilateral economic and technological ties.​

The agreement was inked by India's Commerce and Industry Minister Piyush Goyal and Israel's Economy and Industry Minister Nir Barkat, marking the resumption of talks after previous stalled rounds.​

This development underscores a phased approach to the FTA, with an initial 'early harvest' phase targeting low-contention items for swift commercial gains, followed by negotiations on more sensitive sectors.​

Complementing the FTA, a new Bilateral Investment Agreement (BIA) signed in 2025 enhances investor protections, including shorter local-remedies periods for Israeli investors and coverage of portfolio investments, positioning Israel as India's first OECD partner with such a modern framework.​

Bilateral merchandise trade has softened recently, with India's exports to Israel dropping to approximately $2.14 billion and imports to $1.48 billion in 2024–25, yielding a total of about $3.6 billion, yet the partnership remains robust in high-value domains.​

Sectoral cooperation spans Agritech, water management, cybersecurity, and defence, with calls to scale pilot projects into national programs and deepen industrial collaboration in high-tech goods, services, and innovation.​

The FTA negotiations encompass market access for goods by eliminating tariff and non-tariff barriers, investment facilitation, customs simplification, technology transfer, and eased norms for services trade.​

India's manufacturing scale and human capital pair synergistically with Israel's strengths in high-tech innovation, defence systems, water conservation, pharmaceuticals, and start-ups, fostering potential in AI, deep-tech, and digital economy.​

This partnership builds on longstanding strategic ties, including defence and agriculture, with the FTA poised to unlock greater capital flows, trade expansion, and mutual economic resilience amid global shifts.​

Future progress hinges on translating this legal architecture into tangible projects, potentially redefining India–Israel relations as a model for innovation-driven economic alliances.​

Based On IANS Report