Negotiations for a proposed free trade agreement between India and Israel are expected to focus on a wide range of economic and strategic areas that reflect the complementary strengths of the two economies, while also testing how far both sides are willing to open sensitive sectors. Policymakers on both sides see the agreement not merely as a tariff-cutting exercise but as a framework to deepen long-term cooperation in trade, technology, investment and supply chains at a time of global economic realignment.
Market access for goods is likely to form the backbone of the negotiations, with both countries looking to reduce or rationalise tariffs on products where bilateral trade already exists but remains below potential. India’s exports to Israel are concentrated in gems and jewellery, engineering goods, chemicals, textiles and certain agricultural products, while Israel exports machinery, fertilisers, chemicals, electronics and defence-related equipment to India.
"The FTA is expected to explore phased tariff reductions, selective duty eliminations and simplified customs procedures to make these trade flows more competitive," says a London-based international trade lawyer and a former Member of the United Nations International Law Commission.
Alongside tariffs, negotiators are likely to address non-tariff barriers such as standards, certification requirements and customs clearances that often raise costs for exporters, particularly smaller firms.
According to him, trade in services is expected to be one of the more consequential areas of discussion, given India’s global strength in IT, software, professional services and business process outsourcing, and Israel’s advanced capabilities in digital services, fintech and research-driven technology sectors.
An agreement that improves market access for service providers, eases mobility for professionals and provides clarity on regulatory requirements could unlock a new layer of bilateral engagement that goes beyond traditional merchandise trade. Services liberalisation is also seen as a way to balance sensitivities in goods, where domestic industry concerns can be more pronounced, he added.
Technology and innovation are widely viewed as the strategic heart of the proposed agreement. Israel’s reputation as a hub for start-ups, innovation and cutting-edge research aligns with India’s push to move up the value chain in manufacturing, digital infrastructure and emerging technologies. Areas such as artificial intelligence, cybersecurity, semiconductors, defence technologies, health tech and clean energy solutions are expected to feature prominently, not necessarily through tariff concessions alone but through cooperation frameworks that encourage joint ventures, research partnerships and technology transfer.
A modern FTA could include provisions that facilitate collaboration between start-ups, research institutions and venture capital ecosystems in both countries, creating pathways for commercialisation and scale, according a earlier report by IASPOINT.
An agri-portal report, which reviewed the negotiations that India and Israel had earlier on the proposed FTA, state that agriculture and agri-technology are also likely to be part of the negotiation agenda, though with careful calibration. Israel’s expertise in precision irrigation, water management, greenhouse technologies and crop productivity solutions has already found resonance in India, and an FTA could expand collaboration in these areas. At the same time, market access for agricultural and food products will need to balance export opportunities with domestic sensitivities, particularly in India, where farming livelihoods and price stability remain politically and economically sensitive. As a result, cooperation in technology, productivity enhancement and value-added agri-processing may advance more quickly than full-scale liberalisation of farm trade.
Investment facilitation and protection is another area expected to gain prominence, as both governments seek to encourage greater two-way capital flows.
"Clearer rules on investment, dispute resolution mechanisms and greater regulatory transparency could help attract Israeli investment into Indian manufacturing, infrastructure and technology sectors, while also providing Indian companies a more predictable environment to invest in Israel’s innovation-led economy," says a global trade expert and a former diplomat.
"Linked to this is the likely inclusion of chapters on intellectual property rights, aimed at protecting innovation while supporting collaborative research and development, particularly in high-technology and pharmaceutical segments," he said.
Emphasising the critical role of trade facilitation measures, including rules of origin, customs cooperation and logistics efficiency, which are crucial in determining how effective the agreement ultimately proves to be, he said; "Simplifying procedures, reducing delays at borders and aligning technical standards could lower transaction costs and make it easier for firms, especially small and medium enterprises, to participate in bilateral trade. These behind-the-border elements are often seen by businesses as just as important as headline tariff cuts," he added.
While the potential scope of the agreement is broad, negotiators will also have to navigate challenges. Israel’s economy is highly advanced and already integrated into global markets through multiple trade agreements, which may limit the extent of tariff concessions it is willing to offer. India, for its part, will be cautious about opening sectors where domestic industries could face competitive pressure. The pace and ambition of the talks will therefore depend on how both sides balance economic opportunity with political and industrial considerations.
Overall, the proposed India-Israel free trade agreement is shaping up as a comprehensive and forward-looking pact that aims to combine market access with deeper cooperation in technology, innovation and investment. If structured effectively, it could help expand bilateral trade well beyond current levels, embed technology partnerships into formal economic frameworks and strengthen supply chain linkages between two economies that see each other as long-term strategic partners rather than just trading counterparts.