India, Israel set to exchange market access offers for FTA
India and Israel are preparing to exchange formal market access offers for a proposed Free Trade Agreement (FTA), building on momentum from the second round of negotiations held July 20-23, 2026 in New Delhi
The second round covered trade in goods, trade in services, rules of origin, sanitary and phytosanitary (SPS) measures, technical barriers to trade, intellectual property rights, customs procedures and trade facilitation, and economic cooperation
India is weighing domestic industry concerns, particularly in agriculture and dairy, while finalising the products and tariff lines it will offer for market access
Sectors identified as having strong two-way potential include machinery, chemicals, textiles, agritech, medical devices, and advanced/high-tech manufacturing
A third round of negotiations is expected around October 2026, with both sides aiming to conclude the FTA by early 2027
Types of Trade Agreements: PTA vs FTA vs CEPA/CECA
Trade agreements between countries are classified by the depth and breadth of liberalisation they cover. A Preferential Trade Agreement (PTA) offers tariff concessions on a limited, negotiated list of products. A Free Trade Agreement (FTA) goes further, eliminating tariffs and restrictive regulations on "substantially all trade" between partners, as required under GATT Article XXIV. A Comprehensive Economic Partnership/Cooperation Agreement (CEPA/CECA) extends beyond goods to services, investment, IPR, government procurement, and regulatory cooperation — India's most recent template (e.g., India-UAE CEPA, 2022).
Key Details
- GATT Article XXIV requires FTAs to eliminate duties on "substantially all trade" and complete the process within a reasonable period (generally interpreted as up to 10 years)
- Developing countries can also use the WTO "Enabling Clause" for preferential arrangements without meeting the stricter Article XXIV threshold
- India's most comparable recent template is the India-UAE CEPA (signed February 2022, in force May 2022) — a comprehensive agreement covering goods, services, and government procurement
- The India-Israel talks are still at the negotiating-round stage; no tariff schedules or market-access commitments have been publicly released as of August 2026
The "market access offers" India and Israel are preparing to exchange are the tariff-line-by-tariff-line proposals that determine how comprehensive the eventual agreement will be — i.e., whether it ends up as a narrower FTA or a fuller CEPA-style pact.
India-Israel Bilateral Relations and Trade Trajectory
India and Israel established full diplomatic relations in 1992. Bilateral merchandise trade (excluding defence) grew from roughly $200 million in 1992 (dominated by diamonds) to a peak of about $10.77 billion in FY 2022-23, before declining to around $3.75 billion in FY 2024-25 amid regional security disruptions. The relationship was upgraded to a "Strategic Partnership" during high-level bilateral visits, and negotiations for the current FTA formally began after Terms of Reference were signed in November 2025.
Key Details
- Diplomatic relations established: 1992
- Peak bilateral trade (excluding defence): ~$10.77 billion (FY 2022-23)
- FY 2024-25 bilateral trade (excluding defence): ~$3.75 billion, with India's exports around $2.1 billion and imports from Israel around $1.6 billion
- India is Israel's second-largest trading partner in Asia in merchandise terms
- First round of FTA negotiations concluded successfully in February 2026; second round in July 2026; third expected around October 2026
The FTA is intended to reverse the recent trade decline and formalise cooperation in agritech, defence-adjacent technology, and advanced manufacturing — sectors central to the India-Israel Strategic Partnership.
India's Defensive Posture on Agriculture and Dairy in FTAs
India has consistently kept agriculture, dairy, and MSME-sensitive tariff lines out of, or only partially liberalised in, its FTAs — a pattern also visible in ongoing negotiations with the EU, UK, and now Israel. India is simultaneously seeking offensive market access for Indian agri-exports (onion, potato, garlic, mango, grapes) into Israel while resisting reciprocal liberalisation on dairy and select farm products.
Key Details
- India has protected farmer, dairy-sector, and MSME interests as a standard negotiating red line across all its FTAs (per official statements)
- Dairy access has been a sticking point in other ongoing negotiations, including with New Zealand
- India is seeking access for Indian horticultural exports (onion, potato, garlic, green chillies, turmeric, mango, pomegranate, grapes) into the Israeli market
- Israel offers strength in agritech — drip irrigation, greenhouse technology, precision farming sensors — areas India is expected to liberalise import access for
The "industry concerns" India is weighing while finalising its offer are centred on protecting the dairy and small-farmer sector even as it opens market access for horticultural exports and imports Israeli agri-technology.
- Second round of India-Israel FTA negotiations: July 20-23, 2026, New Delhi (Vanijya Bhawan)
- Terms of Reference for the FTA signed: November 2025
- First negotiation round concluded: February 2026
- Diplomatic relations established: 1992
- FY 2024-25 bilateral merchandise trade (excluding defence): ~$3.75 billion
- Peak bilateral trade (excluding defence): ~$10.77 billion (FY 2022-23)
- GATT Article XXIV benchmark: FTAs must cover "substantially all trade" among members
- Comparable recent Indian CEPA: India-UAE CEPA (2022)