India and Israel are moving rapidly towards finalising a Free Trade Agreement, with both sides hoping to conclude negotiations by February next year. Two rounds of talks have already been held, in February and July, with a third scheduled for October.

The agreement is expected to go beyond conventional trade issues such as tariffs, customs duties and rules of origin, incorporating deeper cooperation in investment, innovation and technology partnerships. Ambassador Reuven Azar emphasised that while Israel is already a relatively open economy, India’s larger market offers greater scope for access, and in return India is seeking stronger investment commitments.

Governments cannot dictate private sector decisions, but they can create enabling frameworks, and this is where innovation and technology collaboration will play a central role.

The ambassador highlighted that Indian companies are already developing intellectual property and technological solutions for Israeli firms, while Israeli technology companies are increasingly looking to India for investment and partnerships.

Once the FTA is concluded, it will become easier for Israeli firms to enter India and for Indian companies to invest in Israeli start-ups, particularly in areas such as defence, water technology and agriculture. He noted that the cooperation chapter is the most complex part of the negotiations, as mechanisms must be designed to ensure mutual benefit in both trade and innovation.

Bilateral trade figures currently stand at around $3–4 billion, though this number is somewhat misleading due to the UAE’s emergence as a hub following the Abraham Accords, which has diverted trade flows.

The ambassador argued that the true value of the partnership lies not in headline trade numbers but in co-production, innovation and adaptation of technologies. Israeli water technologies, for instance, are being localised by Indian firms to reduce costs and make them viable for the domestic market. This model could be replicated across multiple sectors, creating sustainable economic value.

Infrastructure has emerged as another major pillar of cooperation. Israel has significant infrastructure needs, and Indian companies are being encouraged to participate. The $50-billion Greater Tel Aviv Metro project is a prime example. Of the 22 companies that applied for prequalification in the Infra-1 tenders, 11 were Indian.

Each tender is worth approximately $800 million, and if Indian firms qualify, they will have strong opportunities to secure contracts. These projects are backed by Israeli government financing, meaning Indian firms can participate without bringing their own capital. This could mark a transformative step in India-Israel economic relations, embedding Indian infrastructure expertise in Israel’s development.

The evolving security situation in West Asia, particularly the conflict involving Iran, has created disruptions in supply chains. Some trade previously routed through Gulf hubs is now moving back to Indian ports. Ambassador Azar stressed that the FTA will not be undermined by these challenges; instead, cooperation mechanisms must become more efficient to offset disruptions.

He argued that confronting Iran’s threats is essential for long-term regional stability. Without action, Iran could have developed nuclear weapons, ballistic missiles and drones, casting a shadow over Gulf economies. Millions of Indian workers in the Gulf and Indian companies operating there would benefit from greater stability, even if short-term instability arises from confronting existential threats.

Pakistan’s growing engagement in the Middle East, including defence partnerships with Saudi Arabia, was also noted. Azar observed that while Pakistan is playing a larger role, the principal threat to Saudi Arabia remains Iran and the Houthis in Yemen.

He suggested that regional stability will improve once the Iranian threat is neutralised, reducing the need for external powers in the security equation. Israel’s technological advances in countering drones, missiles and other threats are areas where India and Israel can cooperate more closely, given their shared security challenges. Speed of innovation and deployment is critical, as adversaries are constantly developing new threats.

Agriculture remains a strong area of cooperation. The FTA will not revolutionise this partnership but will encourage more Israeli technology companies to manufacture solutions in India.

Technologies such as N-Drip, which enables efficient irrigation using gravity without external power, are being tested in India.

If approved, they could significantly improve agricultural efficiency. Another innovation involves storage systems that extend the shelf life of produce without electricity, addressing post-harvest losses. 

These technologies are particularly relevant for small farmers and could transform agricultural practices. Centres of Excellence are already introducing such solutions, and the FTA will act as a catalyst for greater private sector participation.

The India-Israel FTA is therefore poised to deepen ties across multiple domains—trade, investment, innovation, infrastructure, defence and agriculture.

It reflects a strategic alignment that goes beyond conventional economic agreements, aiming to create a resilient and future-oriented partnership that can withstand regional uncertainties and deliver long-term benefits to both nations.

Agencies