With both India and Israel reinstating their efforts to start negotiating a Free Trade Agreement, Indian exporters across sectors like electronics and mechanical appliances, gems and jewellery, pharmaceuticals are likely to get the opportunity to tap the opportunity and diversify their export market.
Bilateral merchandise trade remains modest at $3.6 billion, with Indian exports to Israel at $2.145 billion in 2024-25, as per the data of the Ministry of Commerce. India accounts for just 2.3% of Israel’s total imports of $91.87 billion. Some of the top export items from India to Israel include precious or semiprecious stones, electrical machinery and equipment, and nuclear reactors.
According to the United Nations COMTRADE database on international trade, electrical, electronic equipment, machinery, nuclear reactors, boilers, mineral fuels, oils, distillation products and Pearls, precious stones, metals being some of the top most imported items by Israel.
Despite India being Israel's seventh largest trade partner globally, India’s exports to the country have gone down by more than 50% between 2023-24 and 2024-25, with India’s export of mineral oil going down by nearly 100%.
Global Trade Research Initiative (GTRI) notes that even with an FTA, the scale of goods trade is unlikely to grow sharply. Israel is a high-income, technology-driven market of under 10 million people, limiting demand for Indian mass-market exports such as textiles, automobiles or general engineering goods.
“In sectors where India is competitive—agriculture, generics, steel, chemicals—Israel is either self-sufficient, tightly regulated through quality and phytosanitary norms, or already offers tariff preferences to partners like the EU and U.S. This keeps Indian products at a structural disadvantage,” said Ajay Srivastava, founder, GTRI.
Commerce Minister Piyush Goyal and Israeli Minister of Economy and Industry Nir Barkat on November 20 signed the Terms of Reference that would guide negotiations on a FTA between the two countries.