India and Israel have signed terms of reference to begin FTA negotiations and are considering a two-phase implementation to deliver early advantages to businesses.
Israel has invited Indian companies to bid for its USD 50 billion Tel Aviv metro project, as bilateral trade falls to USD 3.62 billion in 2024–25.
India and Israel are exploring a phased rollout of their proposed free trade agreement (FTA) to deliver early gains for businesses in both countries, Commerce and Industry Minister Piyush Goyal said on Sunday.
The two nations signed the terms of reference (ToR) on Thursday to formally commence negotiations.
The framework covers areas such as tariff and non-tariff barrier reduction, customs simplification, investment facilitation, enhanced collaboration on innovation and technology transfer and easing rules to boost services trade.
"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," Goyal said here.
The minister is currently in Israel, meeting senior leaders and businesses to discuss opportunities to strengthen trade and investment ties. He is heading a business delegation of 60 members.
Goyal said that he and Israeli Economy and Industry Minister Nir Barkat agreed to prioritise easier deliverables under the FTA and avoid contentious issues in the initial stage.
He noted that the two sides 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 kickstart the benefits faster," Goyal said.
Speaking on a major infrastructure opportunity, he said Israel has issued pre-qualification documents for a USD 50 billion metro project in Tel Aviv, which includes 300 km of underground tunnelling. Israel is encouraging Indian firms to bid, he added.
"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 India to be a part of that project and "I hope Indian companies take interest and join the bidding process".
During 2024-25, India’s exports to Israel declined 52 per cent to USD 2.14 billion from USD 4.52 billion a year earlier. Imports also fell 26.2 per cent to USD 1.48 billion. Bilateral trade totalled USD 3.62 billion.
India is Israel’s second-largest trading partner in Asia.
While merchandise trade remains dominated by diamonds, petroleum products, and chemicals, recent years have seen growing volumes in electronic machinery, high-tech goods, communications systems, and medical equipment.
Key exports from India include pearls and precious stones, diesel, chemicals, machinery and electrical equipment, plastics, textiles, metals, transport equipment, and agricultural produce.
Imports from Israel consist mainly of pearls and stones, chemicals and fertilisers, machinery and electrical equipment, petroleum oils, defence systems, and transport equipment.
(with PTI inputs)
