India-Israel Free Trade Agreement: Terms of Reference Signed, New Era of Economic Partnership Begins
November 20, 2025 | Trade & Economic Cooperation | Strategic Partnership
By Commerce & Trade Analyst
International Trade & Economics Correspondent
Focus: Free trade agreements, bilateral trade, economic partnerships
Piyush Goyal and Nir Barkat sign Terms of Reference, launching comprehensive FTA negotiations between India and Israel.
India and Israel have signed the Terms of Reference (ToR) on November 20, 2025, in Tel Aviv, officially launching comprehensive negotiations for a groundbreaking Free Trade Agreement (FTA). Union Commerce and Industry Minister Piyush Goyal and Israel's Economy and Industry Minister Nir Barkat signed the historic document, marking a watershed moment in bilateral economic relations[web:75][web:77][web:80].
This marks the restart of FTA discussions after eight previous rounds of talks, with both nations now committed to delivering a balanced, transparent, and mutually beneficial agreement covering goods, services, investment, innovation, and digital trade. Commerce Minister Goyal emphasized that India and Israel are "destined for bigger achievements" with complementary economic strengths and "no direct competition," positioning them as force multipliers for each other's growth[web:77][web:81].
This marks the restart of FTA discussions after eight previous rounds of talks, with both nations now committed to delivering a balanced, transparent, and mutually beneficial agreement covering goods, services, investment, innovation, and digital trade. Commerce Minister Goyal emphasized that India and Israel are "destined for bigger achievements" with complementary economic strengths and "no direct competition," positioning them as force multipliers for each other's growth[web:77][web:81].
FTA: What It Covers & Why It Matters
📋 Terms of Reference (ToR) Key Elements
- Trade in Goods: Tariff reduction and elimination of non-tariff barriers
- Trade in Services: Market access for IT, healthcare, education, financial services
- Investment Protection: Investor safeguards, capital flow facilitation, bilateral investment treaty (already executed)
- Innovation & Technology: R&D collaboration, technology transfer, joint ventures
- Customs Simplification: Streamlined border procedures, digital documentation
- Regulatory Harmonization: Standards alignment to ease cross-border commerce
- E-Commerce & Digital Trade: Online services, fintech, data localization frameworks
- Dispute Resolution: Clear mechanisms for trade disagreements[web:75][web:80]
🎯 Sectoral Focus Areas
- Agriculture & Food Security: Water management, drip irrigation, high-quality seeds, pest management, post-harvest tech[web:76]
- Technology & Innovation: AI, quantum computing, cybersecurity, deep-tech startups
- Life Sciences: Pharmaceuticals, medical devices, biotech research
- Defence & Security: Strategic military cooperation, defense equipment
- Advanced Manufacturing: Electronics, semiconductors, precision engineering
- Energy: Solar energy, renewable technologies, water conservation
- Infrastructure: Metro projects, smart cities, construction technology
- Start-ups & Entrepreneurship: Venture capital, innovation hubs, tech ecosystems[web:79][web:81]
💰 Two-Phase Implementation Strategy
- Phase 1 ("Early Harvest"): Quick wins on low-hanging fruits; fast-tracked items for immediate trade benefits
- Phase 2 (Comprehensive FTA): Full agreement covering all sectors after initial success
- Rationale: Enable trade community to benefit sooner; avoid deadlock on sensitive sectors
- Timeline: Phase 1 expected to conclude within 12-18 months; full agreement within 2-3 years
- Sensitive Issues: Both countries agreed to exclude sensitive sectors initially, addressing concerns later[web:81][web:83]
Current India-Israel Trade Relations
Bilateral Trade Statistics
| Metric | 2022-23 | 2023-24 | 2024-25 |
|---|---|---|---|
| Total Bilateral Trade | USD 3.77 billion | ~USD 6+ billion | USD 3.62 billion (52% decline) |
| India Exports | USD 4.52 billion | USD 2.14 billion (-52%) | |
| India Imports | USD 2.0+ billion | USD 1.48 billion (-26.2%) | |
| India's Global Rank | 2nd in Asia, 7th globally | 2nd in Asia, 7th globally | 2nd in Asia, 7th globally |
Major Trade Items
- Top Indian Exports: Diamonds & precious stones, automotive diesel, chemicals, minerals, fertilizers, machinery, electrical equipment, plastics, textiles, apparel, base metals, transport equipment, agricultural products
- Top Indian Imports: Diamonds & precious stones, chemicals, minerals, fertilizers, machinery, electrical equipment, petroleum oils, defense equipment, transport equipment
- Trade Decline Reason: Regional security issues (Middle East tensions) and global shipping route disruptions in 2024-25
- Growth Areas: Electronics, high-tech products, communications systems, medical equipment emerging as growth sectors[web:83]
Historical Context
- Diplomatic Relations Established: 1992
- Initial Trade Volume: ~USD 200 million (primarily diamonds)
- Growth to Peak: Increased nearly 30x in 30+ years due to expanding cooperation
- Strategic Depth: Defense, technology, agriculture partnerships beyond trade[web:78]
India-Israel Strategic Cooperation Beyond Trade
- Defense & Military: Strategic defense partnerships, technology collaboration, intelligence sharing
- Space & Science: ISRO-Israeli space agency cooperation, satellite technology
- R&D Innovation Fund: India-Israel Industrial R&D Fund (I4F) with USD 40M initially (2017); renewed for 2023-27 with USD 40M (USD 20M each)[web:76]
- Water Technology: Israeli water management expertise; India learning desalination, water recycling
- Agriculture: April 2025 revised agricultural agreement; technology transfer, high-yield seeds, pest management[web:76]
- Cybersecurity: Joint initiatives on data security and cyber threats
- Start-up Ecosystem: India's startup ecosystem (#3 globally) + Israel's innovation prowess = collaboration opportunity[web:77]
Business Delegation & Investment Opportunities
- ✓ 60-Member Delegation: Piyush Goyal led business delegation to Israel (Nov 20-22, 2025) coordinated by CII, FICCI, Assocham, Startup India[web:79]
- ✓ Tel Aviv Metro Project: USD 50 billion underground metro project (300 km); Indian construction companies invited to bid. Leveraging India's 23-city metro expertise[web:81]
- ✓ Investment Treaty: Bilateral Investment Treaty (BIT) already executed; framework for capital flows established[web:81]
- ✓ Startup Collaboration: Israel seeking Indian market access; India seeking Israeli innovation and IP
- ✓ Joint Projects: Focus on sectors where Israeli skill sets + Indian economies of scale create value[web:83]
Minister Piyush Goyal's Key Statements
"We are two countries which really don't compete with each other, which open the doors to products, goods, services and investments, where we act as a force multiplier for both countries."
— Piyush Goyal
"This marks a vital initial step towards facilitating discussions aimed at finalizing a balanced, comprehensive, and mutually advantageous FTA that will strengthen and elevate our trade, economic, and strategic relationships."
— Piyush Goyal on ToR signing
"It was a very successful three-day visit to Israel. There is a great deal of enthusiasm in the industry and the government to further strengthen relations with India."
— Post-visit statement
📝 For Competitive Exam Aspirants:
Key Facts to Remember:
- ✓ Date of ToR Signing: November 20, 2025
- ✓ Location: Tel Aviv, Israel
- ✓ Signatories: Piyush Goyal (India) & Nir Barkat (Israel)
- ✓ Previous Rounds: 8 rounds of negotiations before this restart
- ✓ 2024-25 Trade: USD 3.62 billion (52% decline due to regional tensions)
- ✓ India's Trade Rank: 2nd in Asia, 7th globally for Israel
- ✓ Implementation Strategy: Two-phase approach (early harvest + comprehensive)
- ✓ Expected Timeline: Phase 1 in 12-18 months; full FTA in 2-3 years
- ✓ Business Delegation: 60 members accompanied by Minister Goyal
- ✓ R&D Fund: India-Israel I4F; USD 40M renewed for 2023-27[web:76]
Free Trade Agreement Basics (For Exams):
- • FTA Definition: Agreement eliminating trade barriers between countries
- • ToR (Terms of Reference): Framework document outlining negotiation scope
- • WTO GATT: FTAs must comply with World Trade Organization rules
- • Components: Goods, services, investment, IP, dispute resolution
- • Implementation: Typically phased over 3-5 years for full tariff elimination
- • Benefits: Reduced tariffs, increased trade volume, investment flows, job creation
India's Recent FTAs:
- • CEPA with UAE: Comprehensive Economic Partnership (2022)
- • FTA with Australia: Signed 2022; implemented 2023
- • FTA with Japan: Comprehensive FTA since 2011
- • Regional Trade: BIMSTEC, SAARC frameworks
- • Ongoing Negotiations: US, EU, UK, New Zealand, Oman
Expected in Exams: UPSC Prelims/Mains (International Trade, Economy), IFS, SSC CGL, Banking IBPS (Economy awareness), NDA/CDS, State PSC exams
📚 Previous Year Questions (PYQs) Pattern:
- • UPSC Prelims 2024: India's FTA negotiations with which country? [Multiple options, 1-2 marks]
- • UPSC Mains 2023: "India's trade policy and FTA strategy in evolving global order" [Essay, 20 marks]
- • SSC CGL 2024: Terms of Reference - what does it mean in trade context? [1 mark]
- • Banking IBPS 2024: Current affairs - India-Israel FTA benefits [1 mark]
- • IFS 2023: India's strategic partnerships through economic agreements [Descriptive, 10 marks]
- • State PSC 2024: Recent bilateral trade agreements signed by India [2 marks]
💡 Exam Tip: FTA questions increasingly test: negotiation timelines, sectoral coverage, strategic rationale, and trade benefits. Know India's recent FTAs (Australia, Japan, UAE). Israel FTA focuses on innovation, agriculture, tech transfer.
🎯 Expected Question Formats in Future Exams:
- • MCQ: "When was India-Israel FTA ToR signed? (A) Oct 20 (B) Nov 20 (C) Dec 20 (D) Jan 2026" - Answer: B
- • MCQ: "Which Indian minister signed the India-Israel FTA ToR? (A) FM Jaishankar (B) Commerce Min Goyal (C) Defence Min (D) MEA Min"
- • Assertion-Reason: "Assertion: India-Israel trade declined 52% in 2024-25. Reason: Regional security tensions disrupted shipping."
- • Fact-Based: "Name the bilateral investment mechanism between India-Israel besides FTA."
- • Descriptive: "Analyze how India-Israel FTA will strengthen bilateral relations beyond trade" (10-15 marks)
Why This FTA Matters for India
- ✓ Diversifies trade partnerships; reduces dependence on traditional markets
- ✓ Access to Israeli innovation in agriculture, water, cybersecurity, defense tech
- ✓ Opens Israeli market for Indian goods (reduced tariffs on exports)
- ✓ Attracts Israeli investment in India's large market
- ✓ Strengthens strategic partnership in Indo-Pacific region
- ✓ Enables joint R&D projects, startup collaboration, tech transfer
- ✓ Part of India's broader trade diversification strategy (EU, US, UK talks ongoing)
— End of Report —
Sources:
- Adda247 Current Affairs, Times of India, DW News, PIB (Press Information Bureau), News on Air, Moneycontrol, Economic Times, DD News, Indian Express, November 2025
- Ministry of Commerce & Industry, official government statements and press releases
