India, Israel plan two-phase FTA for early trade benefits

India and Israel are considering implementing their proposed free trade agreement (FTA) in two phases to ensure early benefits for the trade community of both countries, Commerce and Industry Minister Piyush Goyal said on Sunday (November 23).

India and Israel on Thursday inked the terms of reference (ToR) 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.

First focus on low-hanging fruit

Goyal, who is in Israel to meet leaders and businesses to discuss ways to boost bilateral trade and investments, said, “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.”

Also read: Piyush Goyal says India-US trade deal only if terms are fair and equitable

Goyal said that he and Israeli Economy and Industry Minister Nir Barkat have agreed that they will first focus on low-hanging fruit in the FTA. They have also decided not to touch the sensitive issues on both sides. The minister is leading a 60-member business delegation.

The two countries, he said, may look at “how innovative and R&D can drive greater investments in each other's countries, work on joint projects where we can leverage on their skill sets and they can leverage on the economies of scale in a large market like India”.

“It is quite possible that we may come out with the first phase on an FTA, so that we can kick-start the benefits faster,” Goyal said.

Will Indian companies bid for Tel Aviv Metro?

The minister said Israel has just come out with pre-qualification documents for a USD 50 billion Metro project in Tel Aviv. It involves 300 km of underground tunnelling and is one of the largest projects, and they are keen that Indian companies should also bid for it, he said.

“We have several players, both in the public and private sectors, who have done massive work. We have 23 cities which are setting up Metro in India,” Goyal said, adding that Israel would “very seriously” like India to be a part of that project. “I hope Indian companies take an interest and join the bidding process,” he said.

Also read: India's trade deficit hits record USD 41.68 bn in Oct, thanks to gold imports

During 2024-25, India’s exports to Israel dipped 52 per cent to USD 2.14 billion from USD 4.52 billion in 2023-24. Imports, too, fell 26.2 per cent to USD 1.48 billion last fiscal year. The bilateral trade stood at USD 3.62 billion.

India is Israel’s second-largest trading partner in Asia.

India-Israel trade

Though bilateral merchandise trade 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.

(With agency inputs)