India and Israel have finalized the terms for a Free Trade Agreement (FTA) aimed at deepening commercial and strategic ties between the two countries.

Key Details of the Deal

• The FTA is positioned as a "force multiplier" in India-Israel relations, enhancing market access, capital flows, investments, trade, and providing greater economic predictability and stability for both countries.

• Piyush Goyal, India’s Commerce Minister, highlighted that the agreement, alongside a recently executed bilateral investment treaty, will collectively remove obstacles to business and offer reciprocal market access.

• Israel's Economy Minister Nir Barkat emphasized India’s priority status, stating that Israel will encourage joint ventures for large-scale manufacturing in India and make India its hub in Asia.

Trade and Economic Impac

• Both countries agreed to reduce tariff and non-tariff barriers and simplify trade processes for mutual benefit.

• Importantly, Israel is not seeking access to India’s sensitive sectors like dairy, rice, or sugar, preferring instead to focus on exports from India.

• The FTA aims to boost collaborations across sectors such as pharma, agritech, defense, construction, and e-commerce, with a significant Indian business delegation accompanying the ministerial visit.

Background and Trade Volumes

• Negotiations for the FTA began in 2010, were revived formally in October 2021, and have now completed eight rounds.

• In FY24, India-Israel bilateral trade reached $6.5 billion. However, in 2024-25, India’s exports to Israel dropped 52% to $2.14 billion, while imports declined 26.2% to $1.48 billion.

This agreement is expected to open new opportunities, reduce trade costs, enhance investments, and solidify India-Israel strategic partnership in the coming years.

source ndtvprofit