India and Israel are weighing a two-stage rollout of their proposed free trade agreement (FTA), with Commerce and Industry Minister Piyush Goyal indicating that both sides want early deliverables for businesses even as they prepare for deeper negotiations ahead.
During his visit to Israel, where he met political leaders and industry groups, Goyal said the two countries were considering a phased approach.
“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,” he said.
The move follows the signing of the Terms of Reference (ToR) on Thursday to formally launch FTA negotiations.
The ToR covers market access by cutting tariff and non-tariff barriers, investment facilitation, simpler customs procedures, collaborative work on innovation and technology transfer, and easing norms for services.
Goyal and Israeli Economy and Industry Minister Nir Barkat have agreed to begin with areas where consensus is achievable. “We will first focus on low-hanging fruit,” Goyal said, adding that both sides have decided “not to touch the sensitive issues.”
Innovation and joint development projects are likely to be a major strand of the talks.
According to Goyal, the negotiations may explore “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.”
He said an early conclusion of the first tranche was possible. “It is quite possible that we may come out with the first phase on an FTA, so that we can kickstart the benefits faster,” he noted.
Beyond trade talks, India is also being courted for a massive infrastructure project in Israel.
The country has issued pre-qualification documents for a USD 50 billion metro project in Tel Aviv involving 300 km of underground tunnelling. Goyal said Israeli authorities were keen on Indian participation.
“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,” he said, adding that Israel would “very seriously” like Indian companies to join the bidding.
The push for an FTA comes at a time when bilateral trade has seen a downturn. India’s exports to Israel fell 52 per cent in 2024–25 to USD 2.14 billion, down from USD 4.52 billion the previous year. Imports declined 26.2 per cent to USD 1.48 billion.
Overall trade stood at USD 3.62 billion. Israel is India’s second-largest trading partner in Asia.
Diamonds, petroleum products, and chemicals continue to dominate merchandise trade, though exchanges in high-tech equipment, communications systems, electronics, and medical devices have been rising.
India’s export basket includes pearls and precious stones, automotive diesel, chemical and mineral products, machinery, plastics, textiles, apparel, metals, transport equipment, and agricultural goods. Imports include pearls and precious stones, fertiliser and chemical products, machinery, petroleum oils, defence equipment, and transport machinery.
At the end of his three-day trip, Goyal met Israeli Prime Minister Benjamin Netanyahu.
In a post on X, he wrote: “Honoured to call on the Prime Minister of Israel, H.E. @Netanyahu, at the conclusion of my three-day visit. Conveyed to him the warm wishes of Prime Minister @NarendraModi ji. Discussed strengthening our innovation partnership by combining Israel’s hi-tech strengths with India’s scale and talent. Took his guidance on further deepening bilateral economic and strategic engagement across the sectors of agriculture, water, defence, science & technology and innovation.”
