India-Israel FTA: Why Trade Talks Are Gaining Momentum; Who Buys What And Why It Matters

New Delhi: India and Israel are moving closer to a free trade agreement (FTA), with both sides preparing for the next round of discussions in January. Officials close to the development say teams from both countries will meet early in the New Year to take forward negotiations that formally began in November.

At that time, India and Israel signed the Terms of Reference, beginning the official start of talks on the proposed FTA. The focus of the agreement is to expand trade flows and encourage greater investment between the two economies.

According to officials, the January meetings will centre on the overall structure of the India-Israel FTA and the plan that will guide negotiations. Israeli trade representatives are expected to travel to India for these discussions.

The engagement comes as recent trade data points to a slowdown in bilateral commerce. During 2024-25, India’s exports to Israel fell by 52 per cent to $2.14 billion, compared with $4.52 billion in 2023-24. Imports from Israel also declined in the last financial year, dropping 26.2 per cent to $1.48 billion. Taken together, total bilateral trade between the two countries stood at $3.62 billion.

Despite the recent dip, India is Israel’s second-largest trading partner in Asia. Trade between the two countries has traditionally been dominated by diamonds, petroleum products and chemicals. Over the years, the basket has widened, with growing exchanges in electronic machinery, high-tech products, communication systems and medical equipment.

When it comes to exports, India sends a wide range of goods to Israel. These include pearls and precious stones, automotive diesel, chemical and mineral products, machinery and electrical equipment, plastics, textiles and garments, base metals, transport equipment and agricultural produce.

Israel’s exports to India also span major sectors. Major items include pearls and precious stones, chemical and mineral products, including fertilisers, machinery and electrical equipment, petroleum oils, defence-related equipment and machinery and transport equipment.

With both sides looking to strengthen economic ties and reverse the recent fall in trade, the upcoming FTA talks are being closely watched as a potential turning point in the India-Israel economic relationship.