India, Israel to hold next round of FTA negotiations in May

New Delhi: India and Israel will hold the next round of negotiations for the proposed free trade agreement (FTA) between the two countries in May, the commerce ministry said on Thursday.

The two sides concluded the first round of four-day talks. Both countries are engaged in discussions covering a wide range of areas, including trade in goods and services, rules of origin, sanitary and phyto-sanitary measures, technical barriers to trade, customs procedures, intellectual property rights, digital trade, and other key chapters, it said.

"Both sides also agreed to continue inter-sessional engagements virtually. The next round of in-person negotiations will be held in May 2026 in Israel," it said.

During the ongoing two-day state visit to Israel, Prime Minister Narendra Modi, while addressing a special plenary of the Knesset in Jerusalem on February 25, called for early finalisation of an ambitious FTA to realise the untapped trade potential between the two countries.

Both sides noted the untapped potential in key sectors, including machinery, chemicals, textiles, agriculture, medical devices, and advanced technologies.

In November last year, the two countries signed the terms of reference (ToR) to formally start the negotiations for the pact.

In such pacts, two sides significantly reduce or eliminate import duties on maximum number of goods traded between them. Besides, they ease norms to promote trade in services and investments.

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.

India's Chief Negotiator is Ajay Bhadoo, Additional Secretary in Department of Commerce, while the Israeli side is headed by Yifat Alon Perel, Senior Director Trade Policy and Agreements.

India and Israel were engaged earlier also to negotiate a similar agreement. Eight rounds were held, but talks stalled later. The last round was held in October 2021. Now both sides have again started the negotiations.

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.

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 and transport equipment, and agricultural products.

Imports include pearls and precious stones, chemical and mineral/fertiliser products, machinery and electrical equipment, petroleum oils, defence, machinery, and transport equipment.

In September last year, both countries inked a Bilateral Investment Agreement (BIA), under which India reduced the local remedies exhaustion period for Israeli investors to 3 years from 5 years. During April 2000 and June 2025, India received USD 337.77 million foreign direct investment (FDI) from Israel.

Israel is a high-income, technology-driven market of under 10 million people.