India and Israel have launched the first round of negotiations for a comprehensive Free Trade Agreement (FTA) in New Delhi from February 23 to 26, 2026. The talks follow the signing of the Terms of Reference (ToR) in November 2025, marking a structured step toward deepening economic integration between the two strategic partners. The negotiations coincide with Prime Minister [“Narendra Modi”,”india prime minister”]’s visit to Israel, underlining the diplomatic momentum behind the trade dialogue.
Why the FTA Matters Now
Bilateral merchandise trade between India and Israel stood at USD 3.62 billion in FY 2024–25. While cooperation has traditionally been strong in defence, agriculture, and water technologies, both sides see untapped potential in emerging sectors.
The FTA aims to:
- Enhance trade volumes through tariff rationalisation.
- Provide regulatory certainty and predictability to businesses.
- Strengthen supply chain resilience.
- Expand market access for MSMEs and startups.
Given global supply chain disruptions and geopolitical shifts, both nations are seeking reliable trade partnerships aligned with innovation-driven growth.
Key Areas Under Negotiation
Technical teams from both countries are deliberating across multiple domains:
- Trade in goods and tariff schedules.
- Trade in services.
- Rules of origin.
- Sanitary and phytosanitary (SPS) measures.
- Technical barriers to trade (TBT).
- Customs procedures and trade facilitation.
- Intellectual property rights (IPR).
These chapters reflect modern FTA architecture, moving beyond tariff cuts to address regulatory harmonisation and digital-era concerns.
Sectoral Complementarities
India and Israel share strong complementarities in high-technology sectors. Israeli strengths in innovation ecosystems, cybersecurity, artificial intelligence, agri-tech, and water management align with India’s large market, manufacturing ambitions, and digital transformation drive.
Potential areas of synergy include:
- High-tech manufacturing.
- Start-up collaboration and R&D partnerships.
- Climate-resilient agriculture technologies.
- Cybersecurity and digital infrastructure.
An FTA could institutionalise these linkages and facilitate joint ventures, technology transfer, and investment flows.
Strategic and Geopolitical Context
The negotiations underscore the growing strategic depth of India–Israel relations. Beyond defence cooperation, economic engagement is increasingly seen as a pillar of bilateral ties.
The agreement aligns with India’s broader trade strategy, which includes pursuing high-standard FTAs with key partners to:
- Boost exports.
- Integrate into global value chains.
- Enhance competitiveness of domestic industries.
For Israel, closer economic ties with India offer access to one of the world’s fastest-growing major economies and diversification beyond traditional Western markets.
Balancing Interests and Challenges
As with any FTA, negotiations will require balancing domestic sensitivities and export ambitions.
Key challenges may include:
- Ensuring protection for sensitive agricultural products.
- Addressing intellectual property concerns in pharmaceuticals and technology.
- Safeguarding MSME interests.
- Maintaining regulatory sovereignty while enhancing trade facilitation.
Both chief negotiators — India’s Ajay Bhadoo and Israel’s Yifat Alon Perel — have emphasised the goal of a balanced and mutually beneficial framework.
What to Note for Prelims?
- First round of India–Israel FTA talks: February 23–26, 2026.
- ToR signed in November 2025.
- Bilateral merchandise trade: USD 3.62 billion (FY 2024–25).
- Negotiation areas include goods, services, SPS, TBT, IPR, customs.
What to Note for Mains?
- Discuss the role of FTAs in India’s trade diversification strategy.
- Examine how sectoral complementarities can shape bilateral trade agreements.
- Analyse the strategic dimension of India–Israel economic relations.
- Evaluate challenges faced by India in negotiating modern, high-standard FTAs.
