India and Israel Launch First Round of FTA Negotiations Ahead of PM Modi's Tel Aviv Visit
India and Israel commenced the first round of formal Free Trade Agreement (FTA) negotiations in New Delhi on February 23, 2026, scheduled to run until February 26.
Technical experts from both sides are engaging in sessions covering trade in goods, trade in services, rules of origin, sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBT), customs facilitation, intellectual property rights, and investment.
The negotiations follow the signing of Terms of Reference (ToR) in November 2025, formally authorising FTA talks.
Prime Minister Modi is undertaking a State visit to Israel on February 25–26, with discussions expected to provide political direction to the FTA process; an interim agreement may be signed during the visit.
Current bilateral trade stands at approximately USD 3.62–6.53 billion (excluding defence); Israel has agreed to USD 8.6 billion in arms deals with India in 2026, making it India's second-largest defence supplier after France.
India-Israel Bilateral Relations: History and Milestones
India and Israel established full diplomatic relations in January 1992, ending decades of India's policy of not formally recognising Israel (influenced by solidarity with Arab nations and the Palestinian cause under the Non-Aligned Movement). Since 1992, relations have grown rapidly, particularly in defence, agriculture, water technology, and more recently, strategic cooperation.
The FTA negotiations represent the economic dimension of a maturing strategic partnership — both sides recognise that trade in goods/services has lagged far behind the defence and technology relationship, and the FTA aims to address this imbalance.
Free Trade Agreement Components: What Gets Negotiated
A comprehensive FTA involves multiple negotiating "chapters," each covering a distinct aspect of trade and economic relations. For UPSC, understanding what each chapter covers is important for analysing the significance of any trade deal.
Key Details
- Trade in goods: Tariff schedules — which goods get duty eliminated or reduced, timelines, and sensitive list exclusions; Rules of Origin define what counts as "made in" a country for tariff purposes
- Trade in services: Market access commitments under four modes (Mode 1: cross-border supply; Mode 2: consumption abroad; Mode 3: commercial presence/FDI; Mode 4: movement of natural persons); India has strong offensive interests in IT services, healthcare, and education
- Investment: FDI protection, dispute resolution mechanisms (Investor-State Dispute Settlement or ISDS), and investment promotion
- Intellectual Property Rights (IPR): Patent protection periods, data exclusivity, enforcement mechanisms; can be contentious for India (pharmaceutical generics vs patent protection)
- Sanitary and Phytosanitary (SPS) measures: Standards for food safety and animal/plant health; key for agricultural trade
- Technical Barriers to Trade (TBT): Product standards, testing, and certification; mutual recognition arrangements reduce duplicate testing costs
Key details for India-Israel specifically:
- Israel is a technology and innovation powerhouse (the "Start-Up Nation"): over 6,500 active startups; highest R&D expenditure as % of GDP globally (~5.6%)
- India's main export interests: pharmaceuticals (Israel's generic drug market), diamonds (Israel is a major diamond trading hub), agricultural products, textiles
- Israel's main export interests: agri-tech, water technologies, cybersecurity, medical devices, defence equipment; Israel also imports large volumes of rough diamonds from India for cutting/polishing
The breadth of the negotiating agenda (goods, services, SPS, TBT, IPR, investment) signals ambition for a comprehensive deal rather than a narrow goods-only agreement. The interim agreement potentially being signed during PM Modi's visit would likely cover a subset of these areas.
India-Middle East-Europe Economic Corridor (IMEC)
IMEC was announced at the G20 New Delhi Summit in September 2023 as a multi-modal trade and infrastructure corridor linking India to Europe via the Middle East. It was framed as an alternative connectivity initiative to China's Belt and Road Initiative (BRI).
PM Modi's Israel visit and the FTA negotiations are strategically interlinked with IMEC — an FTA would deepen economic integration and create investment frameworks supporting IMEC infrastructure projects in Israel.
India's FTA Strategy: Selective, Export-Oriented Approach Post-2020
India has approached FTAs selectively since withdrawing from RCEP negotiations in November 2019. The India-Israel FTA is part of a broader wave of FTA negotiations resumed after 2022 (India-UAE CEPA, India-Australia ECTA, India-UK ongoing, India-GCC launched February 2026).
Israel's complementarity with India's economy (rather than competition) makes it a relatively less contentious FTA partner than, say, China or the EU — giving negotiators more room to reach agreement across multiple sectors.
- Full diplomatic relations established: January 1992
- PM Modi's previous Israel visit: July 2017 (first Indian PM to visit Israel); elevated to Strategic Partnership
- Terms of Reference for FTA: signed November 2025
- First round of FTA negotiations: February 23–26, 2026, New Delhi
- India-Israel bilateral trade: USD 3.62–6.53 billion (excluding defence; FY 2023-24)
- Israeli defence deals with India (2026): USD 8.6 billion (making Israel India's second-largest defence supplier after France)
- Israel R&D expenditure as % of GDP: ~5.6% (highest globally)
- IMEC announced: September 9, 2023 (G20 New Delhi); corridor links India-Gulf-Europe
- Adani Ports acquired stake in Haifa Port: 2023
- PM Modi's Israel State visit: February 25–26, 2026
- India's pharma exports to Israel: pharmaceuticals are India's top export to Israel