India-Israel strengthen economic ties: FTA talks, investment collaboration underway
What's the story
India and Israel are working to strengthen their economic ties through a Free Trade Agreement (FTA) and increased investment cooperation. During his recent visit to Israel, India's Commerce and Industry Minister Piyush Goyal met with Israeli Finance Minister Bezalel Smotrich. The two discussed ways to enhance investment linkages, fintech cooperation, and regulatory collaboration for stronger economic exchanges between the two countries.
Trade agreements
Bilateral Investment Agreement and FTA negotiations
From April 2000 to June 2023, India received $337.77 million in foreign direct investment (FDI) from Israel. In September this year, the two countries signed a Bilateral Investment Agreement (BIA), reducing the local remedies' exhaustion period for Israeli investors in India from five years to three. On November 20, India and Israel signed the Terms of Reference (ToR) to begin talks for a potential Free Trade Agreement (FTA).
Sectoral coverage
FTA to cover various sectors
The proposed FTA will cover market access and trade liberalization, gradually eliminating tariff barriers and reducing non-tariff barriers by expediting approvals and market access. The talks will cover investment, customs procedures simplification, technology transfer, defense, space, fintech, agri-tech, AI, cyber security, R&D, innovation, and drip irrigation. Goyal said the services sector will benefit from IT tourism collaboration on BPOs with an FTA creating a bridge for skilled professionals from India to work in Israel.
Project updates
Indian companies shortlisted for Tel Aviv metro project
Goyal also revealed that eight to 10 Indian companies have been shortlisted for a ₹4.5 lakh crore metro project in Tel Aviv, with a pre-qualification interest already issued. While Israel's Minister Barkat expects a tenfold increase in bilateral trade with an FTA, Goyal is optimistic about bilateral trade reaching $30-40 billion over the next five years.