New Delhi: India and Israel have kicked off their first round of negotiations on a proposed free trade agreement (FTA), signalling a push to deepen economic engagement as New Delhi steps up efforts to secure market access partnerships with key technology-driven economies.
The talks began on 23 February in New Delhi and will continue until 26 February, the commerce ministry said on Tuesday.
The negotiations follow signing of the terms of reference in November 2025. This had laid down a framework for discussions across identified areas aimed at expanding trade and economic cooperation.
The development assumes significance as Prime Minister Narendra Modi is slated to pay a two-day state visit to Israel from 25 February on the invitation of Israel Prime Minister Benjamin Netanyahu. This will be Modi’s second visit to Israel, underlining the growing strategic and economic depth in bilateral ties.
Merchandise trade between the two countries was at $3.65 billion in FY25. India and Israel share complementarities across several sectors, and the trade pact will be a catalyst to further enhance bilateral trade, the ministry said.
The proposed agreement is expected to provide greater certainty and predictability to businesses, including medium and small businesses, through clearer rules and improved market access commitments.
According to the commerce ministry, technical teams are discussing a wide range of chapters, including trade in goods and services, rules of origin, sanitary and phytosanitary measures, technical barriers to trade, customs procedures and trade facilitation, and intellectual property rights.
At the opening session, commerce secretary Rajesh Agrawal said the negotiations have started at an opportune time, coinciding with the Prime Minister’s visit to Israel. He highlighted the opportunities in innovation, science and technology, artificial intelligence, cybersecurity, high-tech manufacturing, agriculture and services, noting that the FTA could help both sides better use their strengths.
India’s chief negotiator Ajay Bhadoo, additional secretary in the commerce ministry, called for a balanced agreement that creates a forward-looking framework for an evolving partnership. Israel’s chief negotiator Yifat Alon Perel, senior director for trade policy and agreements and deputy trade commissioner, said the pact would have the potential to strengthen supply chains, enhance cooperation and open new markets.
For India, the talks with Israel come amid an active FTA calendar that includes ongoing negotiations and reviews with major partners. New Delhi has increasingly focused on agreements that can support technology transfer, value-chain integration and services exports, rather than tariff reductions alone. Israel, known for its strengths in agri-tech, water management, defence technologies and startup ecosystems, is seen as a strategic partner in areas that align with India’s manufacturing and digital ambitions.
Trade experts said that while bilateral trade with Israel is modest compared to that with India’s larger partners, the composition is technology-intensive and investment-linked. “An FTA could help reduce tariff and non-tariff barriers, ease regulatory frictions and provide a framework for collaboration in emerging sectors such as AI and cybersecurity, where both countries have complementary capabilities,” said Ajay Sahai, director general, Federation of Indian Exporters Organisation (Fieo).
India’s merchandise trade with Israel has seen a sharp correction over the past three fiscal years, with exports declining significantly from their FY23 peak, while imports have moderated at a slower pace.
India’s exports to Israel were at $8.45 billion in FY23, falling to $4.53 billion in FY24, and to $2.15 billion in FY25, commerce ministry data shows. This marks a decline of about 46% in FY24 over FY23, followed by another 53% fall in FY25. Overall, India’s exports to the country have contracted by nearly 75% between FY23 and FY25, the data shows.
On the import side, India bought Israeli goods worth $2.32 billion in FY23, which declined to $2.01 billion in FY24, down 13.6%, and to $1.48 billion in FY25, down 26%, the ministry’s data shows. Over the two-year period, imports have fell by a little over 36%.
India has maintained a trade surplus with Israel, although the gap has narrowed considerably. The trade surplus was at $6.13 billion in FY23, shrinking to $2.52 billion in FY24, and further to $0.66 billion in FY25, per the ministry data.
FTA push
In a separate event on Tuesday, commerce and industry minister Piyush Goyal said India is building “bridges of trade, trust and transformation” at a time of global uncertainty and it now enjoys preferential access to nearly two-thirds of global trade through a series of high-quality FTAs concluded under the Prime Minister’s leadership.
Virtually addressing the 5th CII National Exports Competitiveness Summit in Chennai, Goyal said all nine FTAs signed under the current government have been with developed economies that complement India’s growth journey. He said no country can become developed without opening its doors to the global economy and reiterated the government’s commitment to reform, perform and transform.
The minister also indicated that talks on FTA with Canada could be launched soon.
Highlighting the pace of engagement, Goyal said he had participated in three FTA-related discussions within six hours, including launching negotiations with the Gulf Cooperation Council bloc, meeting the Israeli negotiating team to advance FTA discussions, and preparing for talks with Chile aimed at securing access to critical minerals.