India to Strike Major Trade Deal with Israel, PM Modi Receives Invitation; FTA Expected by Year-End

Tel Aviv/New Delhi: Following Europe, India is set to deepen economic ties with one of its closest allies, Israel, as both countries move toward a Free Trade Agreement (FTA) by the end of this year. Israeli Ambassador Reuven Azar confirmed the development, noting that India and Israel have already signed the framework for FTA negotiations.

Speaking to an Indian private news channel, Ambassador Azar said a delegation from India is scheduled to visit Tel Aviv in February to discuss trade facilitation and the agreement. He explained that initial talks would focus on straightforward issues, followed by discussions on more complex matters. The ambassador expressed optimism that a formal trade deal could be concluded within 2026.

Strengthening Trade and Logistics

Addressing the proposed India-Middle East-Europe Economic Corridor (IMEC), Azar emphasized Israel’s efforts to develop the necessary logistics infrastructure to reduce shipping costs and simplify trade between the two countries.

“We are building a task force to create infrastructure that makes moving goods easier and cheaper. This will generate economic prosperity for all parties. With Indian partnerships and support from other countries under U.S. leadership, we aim to streamline trade further,” he said.

Robust India-Israel Economic Ties

India and Israel have traditionally maintained strong strategic and economic relations, particularly in the defence sector. During Operation Sindhur, Israel was the only country to publicly support India’s actions against Pakistan. Beyond defence, bilateral trade in non-defence sectors amounted to $3.75 billion in FY 2024-25, while the peak trade was $10.77 billion in 2023-24.

India enjoys a trade surplus with Israel, exporting more goods than it imports. In the last fiscal year, imports from Israel totaled $1.61 billion.

Defence and Strategic Collaboration

Israel has emerged as India’s second-largest defence partner after Russia, accounting for roughly 40% of Israel’s annual arms exports. Bilateral defence collaboration includes the joint development of the Barak-8 missile system and the production of Hermes 900 drones in India.

Agriculture, Innovation, and Technology Cooperation

The two countries also collaborate extensively in agriculture, particularly through three-year work plans. Israel has established 31 Centers of Excellence across 13 Indian states, focusing on drip irrigation, crop diversification, and technology transfer.

In addition, India has committed $40 million for industrial research and development with Israel from 2023 to 2027, with a focus on AI and industrial innovation.

Strategic Investments

As part of the IMEC initiative, a consortium led by India’s Adani Group acquired Haifa Port in 2022 for $1.18 billion, underlining the growing economic engagement between India and Israel.

Upcoming PM Visit

Prime Minister Narendra Modi is expected to visit Israel later this month, reportedly on February 27-28, marking his second official trip to the country. His visit follows a postponed visit by Israeli Prime Minister Benjamin Netanyahu, which was deferred due to security concerns at the end of last year.

With the FTA and strengthened trade ties, India-Israel economic relations are poised for a new high, combining strategic alignment with economic opportunity.