India and Israel to Implement Free Trade Agreement in Two Phases for Early Benefits

India and Israel are set to fast-track negotiations for a Free Trade Agreement (FTA), planning a phased implementation aimed at delivering early benefits to both countries' trade communities. 

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Launch of Formal Negotiations 

During a productive three-day visit to Israel, Indian Commerce and Industry Minister Piyush Goyal confirmed that both governments signed the Terms of Reference (ToR). This formally started the FTA negotiations. The ToR outlines specific priorities, including enhanced market access, lower tariffs, smoother customs procedures, stronger investment facilitation, cooperation in technology transfer, and liberalised norms for trade in services. 

Phased Agreement Structure 

Goyal announced the intention to split the FTA into two distinct phases for swift implementation. He highlighted that the first phase would focus on “low-hanging fruit”—quickly actionable areas where consensus exists—while postponing sensitive issues for subsequent discussions. This phased approach aims to activate early trade and investment gains for both countries upon completion of the initial tranche of the agreement. 

Key Areas Under Discussion 

The framework of the FTA will include several priority areas: 

- Tariff reductions and elimination of non-tariff barriers on select goods. 

- Investment facilitation, allowing smoother entry and participation in each other's markets. 

- Simplified customs processes to streamline trade flows. 

- Expanded cooperation in innovation, technology transfer, and research and development projects. 

- Liberalisation of services trade and easier business operations for service providers. 

Israel’s Metro Project: Indian Bidders Welcomed 

During his visit, Goyal also highlighted a major infrastructure opportunity, announcing that Israel has issued pre-qualification documents for a $50 billion metro project in Tel Aviv, which will see 300 km of underground tunnels constructed. The Israeli government encourages Indian companies—both public and private—to participate in the bidding process, citing India’s ongoing metro construction in 23 cities as a signal of expertise and capacity. 

Boosting Bilateral Ties 

The renewed trade discussions build on longstanding economic links, with India already ranking among Israel's top Asian trading partners. The phased FTA is expected to unlock new opportunities for business collaboration, technology exchange, and infrastructure development, positioning both countries for accelerated economic engagement. 

As negotiations begin, officials from both sides have stressed their commitment to pragmatic procedures to ensure immediate advantages for exporters, investors, and service providers from India and Israel.