India and Israel plan to implement their proposed free trade agreement (FTA) in two phases to bring quick wins to businesses on both sides, Trade and Industry Minister Piyush Goyal said on Sunday during his visit to Tel Aviv. This announcement comes days after the two countries signed the terms of reference (ToR) to officially begin negotiations on the agreement.
Goyal said both sides wanted to avoid delays by launching a first tranche first. “We are planning to proceed in two phases. A decision will be taken when negotiations begin. Both ministers want to finalize the first phase earlier so that the business community benefits sooner,” he said.
The terms of reference cover market access for goods through the removal of tariff and non-tariff barriers, investment facilitation, simplification of customs procedures, cooperation on innovation and technology transfer and relaxation of rules for trade in services.
The minister, who heads a 60-member trade delegation, said he and Israeli Economy and Industry Minister Nir Barkat agreed that negotiators should focus first on areas where a quick agreement is possible.
Goyal said they would not address “sensitive issues” outright. Instead, the initial phase could focus on creating joint R&D and innovation partnerships and creating new investment channels. “It is entirely possible that we will get to the first phase of an FTA, so that we can reap the benefits more quickly,” he added.
Goyal also discussed a major infrastructure opportunity in Israel: a $50 billion metro project in Tel Aviv involving 300 km of underground tunnels. He said Israel had released pre-qualification documents and wanted Indian companies to participate.
“We have several players, both in the public and private sectors, who have carried out massive works. We have 23 cities installing metros in India,” he said, adding that Israel would be “very serious” about Indian companies joining the tender.
Bilateral trade between the two countries fell sharply in 2024-2025. India’s exports to Israel fell 52% to $2.14 billion, while imports fell 26.2% to $1.48 billion, taking total trade to $3.62 billion.
India remains Israel’s second-largest trading partner in Asia, with trade largely focused on diamonds, petroleum products and chemicals, although recent years have seen growth in high-tech equipment, communications systems and medical devices.
India’s exports to Israel cover pearls and precious stones, automobile diesel, chemicals, machinery, plastics, textiles, base metals, transport equipment and agricultural products. Imports include pearls and precious stones, fertilizers and mineral products, petroleum oils, machinery, transport equipment and defense sector supplies.
(With inputs from PTI)
