New Delhi, February 24 India and Israel have begun the first round of negotiations for a free trade agreement (FTA) here, with the aim of further boosting commercial ties and promoting investment, an official said.
The four-day talks will conclude on February 26, the official said.
In November last year, the two countries signed the terms of reference (ToR) to formally initiate negotiations for the agreement.
In such agreements, both sides significantly reduce or eliminate import duties on a large number of goods traded between them. Furthermore, they ease regulations to promote trade in services and investment.
The ToR include market access for goods by eliminating tariff and non-tariff barriers, investment facilitation, simplification of customs procedures, increased cooperation for innovation and technology transfer, and easing regulations to promote trade in services.
The ongoing negotiations are important as Prime Minister Narendra Modi is visiting Israel on February 25-26.
India and Israel had also previously engaged in negotiations for 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 by 52 per cent to USD 2.14 billion from USD 4.52 billion in 2023-24. Imports also fell by 26.2 per cent to USD 1.48 billion in the last fiscal year. The bilateral trade stood at USD 3.62 billion.
India is Israel's second-largest trading partner in Asia.
Although 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, 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, as well as agricultural products.
Imports include pearls and precious stones, chemical and mineral/fertiliser products, machinery and electrical equipment, petroleum oils, defence, machinery, and transport equipment.
"The FTA will open up greater market access, capital flow, ... in both goods and services, remove obstacles to doing business, provide clarity and predictability to our economic engagement," Commerce and Industry Minister Piyush Goyal had said in November in Tel Aviv.
In September last year, both countries inked a Bilateral Investment Agreement (BIA), under which India reduced the period for Israeli investors to exhaust local remedies to 3 years from 5 years.
During April 2000 and June 2025, India received USD 337.77 million in foreign direct investment (FDI) from Israel.
Israel is a high-income, technology-driven market with a population of under 10 million.