India–Israel FTA talks resume with second round in May.
Bilateral trade fell over 50% to $3.6bn by FY2025.
Exports shift from petroleum, diamonds to ceramics, engineering and electronics.
Tech collaboration grows via the $40mn India–Israel innovation fund.
New Delhi and Tel Aviv will hold the second round of in-person negotiations for the Free Trade Agreement (FTA) in May this year in Israel, the commerce ministry informed. Both parties concluded the first round of negotiations held from 23 to 26 February in New Delhi.
During the four-day negotiations, both countries engaged in discussions covering a wide range of areas, including trade in goods and services, rules of origin, sanitary and phytosanitary measures, technical barriers to trade, customs procedures, intellectual property rights and digital trade, among others.
3 February 2026
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India and Israel held eight rounds of negotiations earlier, with the last meeting taking place in October 2021. In a renewed effort to explore untapped potential in key sectors, two sides also signed a Bilateral Investment Agreement (BIA) last year in September.
Sharp Decline in Trade
Bilateral goods trade between India and Israel declined from a peak of $10.8bn in FY2023 to $3.6bn in FY2025, representing a fall of more than 50% in just two years.
India’s exports to Israel dropped from $8.5bn to $2.1bn during this period, which significantly reduced India’s trade surplus.
Rubix Data Sciences notes that the decline is not simply the result of short-term market fluctuations. Instead, it reflects a deeper shift in how India and Israel engage economically, with the relationship moving toward new sectors and forms of collaboration.
"India’s exports are becoming less dependent on traditional categories such as refined petroleum products and diamonds, with sectors such as ceramics, engineering goods, and electronics components gaining ground," it said.
"On the import side, technology-oriented products such as electrical integrated circuits, telecom equipment, and specialised agricultural inputs are accounting for a growing share, pointing to Israel’s increasing relevance as a source of high-value technology and innovation for India," Rubix data added.
Signs of Stabilisation
However, early trends in FY2026 indicate a potential stabilisation, with exports rising by 9% and imports increasing by 17.4% during April to December 2025 compared to the same period in the previous year.
Meanwhile, technology has emerged as one of the strongest anchors of the bilateral
relationship. Institutional platforms such as the India–Israel Industrial R&D and Technological Innovation Fund, with a dedicated corpus of USD 40 million, are supporting joint innovation in areas including precision agriculture, water management, and clean technologies.
"While headline trade volumes have declined, the underlying relationship is evolving in a more strategic direction. Technology collaboration, spanning agriculture, semiconductors, and advanced manufacturing, is emerging as a central pillar. The proposed FTA could accelerate this shift by enabling deeper integration across innovation-led sectors while restoring trade momentum," said Mohan Ramaswamy, CEO of Rubix Data Sciences.
