After years of stagnation, India and Israel have restarted their Free Trade Agreement (FTA) negotiations. This renewed momentum follows engagement at the highest levels of both governments. The initial round of negotiations was held last week in New Delhi. The negotiations aim to translate strategic trust into business trade; both sides will work at speed to avoid the delays experienced previously.
Negotiators have agreed upon the chapters and timelines, as well as virtual follow-up meetings. As a result, expectations regarding delivery and scope are high. The second in-person round of negotiations will be held in May 2024 in Israel, and between rounds, the teams will continue to work together virtually to keep a good pace of progress.
This resumption of FTA negotiations represents an ongoing trend toward changes in global trade dynamics and opportunities. While ministers endorsed a high level of ambition and enthusiasm for a successful agreement, they also agreed that businesses would like to see predictability and long-term certainty.
What the proposed FTA framework aims to deliver under India Israel FTA talks
The framework is intended to reduce tariffs and simplify regulations across many sectors. Discussion areas will include: trade in goods, trade in services, rules of origin, and customs processes. They will also cover sanitary and Phytosanitary standards, intellectual property, and digital trade. Ajay Bhadoo from India has been appointed lead negotiator for India’s side, while Yifat Alon Perel has been appointed lead negotiator for Israel’s side.
The terms of reference were agreed by both sides earlier this year, and they have also concluded a bilateral investment treaty, which will create links, expand both countries’ access to each other’s markets, and encourage capital to flow between them. The priority sectors are machinery, chemicals, textiles, agriculture, medical devices, and advanced technologies. The goal of the officials is to create a modern, comprehensive, and future-proofed trade agreement that will generate innovation, growth in manufacturing, and growth in services from companies on both sides of the border.
Why trade data adds urgency to May talks
The urgency to finalize negotiations has been emphasized by new information that highlights the significant growth of bilateral trade from $3.62 billion in 2024-2025 (with India exporting $2.14 billion and importing $1.48 billion). Additionally, exports to India have dropped substantially compared to last year, and both sides of the negotiating table are optimistic about reaching an agreement that would help restore export levels to India. During Prime Minister Narendra Modi’s recent visit to the U.S., he emphasized the need to complete negotiations soon and described the trade deal as a mechanism for realizing future opportunities on both sides.
Industry executives from both sides echoed these sentiments and called for a continuation of momentum in the negotiations. Should the teams maintain this level of progress through the second half of May, the next round of negotiations may help to facilitate an agreement between the two countries. If achieved, the agreement has the potential for establishing ongoing trade relations that foster long-lasting resiliency through supply chains, innovation ecosystems, and sources of investment that would be mutually beneficial to U.S. and Indian companies and consumers around the world.
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