India and Israel are considering implementing their proposed Free Trade Agreement(FTA) in two phases to ensure early benefits for the trade community of both countries, Commerce and Industry Minister Piyush Goyal said on Sunday (November 23, 2025).

India and Israel on Thursday (November 20, 2025) inked Terms of Reference (ToR) to formally launch negotiations for the agreement. The ToR include market access for goods by eliminating tariff and non-tariff barriers, investment facilitation, simplification of customs procedures, increasing cooperation for innovation and technology transfer, and easing norms to promote trade in services.

“We are considering doing this in two tranches. A decision will be taken when the talks begin. Both Ministers are keen to finalise the first phase early so that the trade community benefits sooner,” Mr. Goyal said.

The Minister is in Israel to meet leaders and businesses to discuss ways to boost bilateral trade and investments. He is leading a 60-member business delegation.

Mr. Goyal said that he and Israeli Economy and Industry Minister Nir Barkat have agreed that they will first focus on low-hanging fruit in the FTA. They have also decided not to touch the sensitive issues on both sides.

The two countries, he said, may look at “how innovative and R&D can drive greater investments in each other’s countries, work on joint projects where we can leverage on their skill sets and they can leverage on the economies of scale in a large market like India”.

“It is quite possible that we may come out with the first phase on an FTA, so that we can kickstart the benefits faster,” Mr. Goyal said.

On a big metro project in Israel, the Minister said Israel has just come out with pre-qualification documents for a $50 billion metro project in Tel Aviv. “It involves 300 km of underground tunnelling and is one of the largest projects, and they are keen that Indian companies should also bid for it,” Mr. Goyal said.

“We have several players, both in the public and private sectors, who have done massive works. We have 23 cities which are setting up metros in India,” Mr. Goyal said, adding that Israel would “very seriously” like India to be a part of that project and “I hope Indian companies take interest and join the bidding process”.

During 2024-25, India’s exports to Israel dipped 52% to $2.14 billion from $4.52 billion in 2023-24. Imports, too, fell 26.2% to $1.48 billion last fiscal year. The bilateral trade stood at $3.62 billion.

India is Israel’s second-largest trading partner in Asia. Though 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 and 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, transport equipment, and agricultural products.

Imports include pearls and precious stones, chemical and mineral/fertiliser products, machinery and electrical equipment, petroleum oils, and defence, machinery, and transport equipment.

India and Israel are likely to sign a bilateral investment treaty during the upcoming visit of Israeli Finance Minister Bezalel Smotrich this week, while laying the groundwork for a free trade agreement (FTA) to boost trade between the two countries, according to sources.

Mr. Smotrich will be on a three-day visit to India next week between September 8 and 10, during which he will meet Union Finance Minister Nirmala Sitharaman, Commerce and Industry Minister Piyush Goyal and Minister of Housing and Urban Affairs Manohar Lal Khattar.

Besides, the Israeli Finance Minister will also visit Mumbai and the GIFT City in Gandhinagar.

“The aim of this visit is to deepen Israel’s economic and financial ties with India through bilateral meetings and prepare common ground for some of the key agreements, including bilateral investment treaty (BIT) and free trade agreement (FTA),” sources told PTI in Jerusalem.

“Both countries have been negotiating a draft bilateral investment treaty (BIT) and have concluded the negotiations. The Finance Ministers are expected to sign the BIT during the visit.” The BIT between the two countries assures appropriate protection to Israeli and Indian investors, in light of relevant international precedents and practices.

It is likely to enhance the comfort level and boost the confidence of investors by assuring a minimum standard of treatment and non-discrimination, while providing for an independent forum for dispute settlement through arbitration.

Israel has signed BITs with over 15 countries since 2000, including the UAE, Japan, the Philippines, Thailand, and South Africa.

“BIT reflects both nations’ shared commitment towards enhancing economic cooperation and creating a more robust and resilient investment environment. The BIT is expected to pave the way for increased bilateral investments, benefiting businesses and economies in both countries,” one of the sources said.

This is the fourth visit by any Israeli Minister to India this year.

Israeli Minister of Tourism Haim Katz, Minister of Economy and Industry Nir Barkat and Minister of Agriculture and Food Security Avi Dichter visited India earlier this year.

India and Israel are strategic partners, and bilateral trade between the countries is close to $4 billion annually.

Cumulative ODI from India to Israel during the period April 2000 to April 2025 was $443 million, and Israel’s direct FDI into India during the period April 2000 – March 2025 was $334.2 million.

As active members of institutions like the World Bank and the Asian Development Bank, both countries can co-finance Multilateral Development Bank (MDB) backed projects or support joint initiatives in third countries, particularly the global south.