India and Israel are looking to give fresh momentum to their economic partnership, with negotiations for a Free Trade Agreement (FTA) advancing alongside expanding cooperation in innovation, defence, infrastructure, agriculture and technology. With two rounds of FTA negotiations already completed and the next round planned for October, Israel expects the talks could move towards conclusion by February.
In conversation with Anoop Verma, Reuven Azar, Ambassador of Israel to India, notes that the proposed agreement must go beyond conventional issues such as tariffs, market access and rules of origin to create stronger pathways for investment, innovation and technology partnerships. He highlights growing opportunities for Indian infrastructure companies in Israel, including the $50-billion Greater Tel Aviv Metro project, while outlining the potential for deeper collaboration in defence technologies and agriculture.
The ambassador also talks about the evolving security situation in West Asia, the Iranian challenge and its implications for India and the Gulf region.
Edited excerpts:
India and Israel are currently negotiating a Free Trade Agreement. What is the timeline for concluding the negotiations and eventually signing the agreement?
We want to conclude it as soon as possible. We have already held two rounds of negotiations. The first round was in February and the second took place in July. We are planning a third round in October, and we hope that by the fourth round, in February, we will be able to finalise the agreement. We are negotiating several baskets. There are the traditional market-access issues, including customs duties and rules of origin. There are also issues relating to reciprocal government procurement.
But perhaps the most important—and also the most complex—part concerns cooperation. If you look at agreements India has signed with groups such as EFTA, investment commitments have been an important component. There is a certain imbalance because Israel is already a relatively open economy when it comes to customs and is also a small market, whereas India is a very large market. Therefore, in a conventional trade agreement, India potentially has more to offer in terms of market access. Naturally, India is looking for benefits in return, including greater investment.
The challenge is that governments cannot make commitments on behalf of private companies. What governments can do, however, is create avenues and an enabling environment for investment. This is where innovation can become particularly important. We are already cooperating extensively in innovation, including in defence, and I believe this is going to become much bigger. There is also considerable cooperation involving Indian companies developing intellectual property and technological solutions for Israeli companies.
Once the FTA is finalised, along with the investment and financial agreements that we have been working on, it will become much easier and more attractive for Israeli technology companies to come to India, invest here and engage with Indian companies. At the same time, we are seeing Indian companies investing in Israeli start-ups because they want access to technologies that can give them an edge in global markets.
This cooperation chapter is probably the trickiest part of the negotiations. During the third round, we hope to study more closely the mechanisms India has developed in agreements with EFTA and others, and examine how Israel can respond to those parameters. The objective is to ensure that the relationship is mutually beneficial not only in terms of trade, but also investment and innovation.
What is the current level of bilateral trade, and how significantly could it increase once the FTA is concluded?
That is actually a complicated question because bilateral trade figures have been declining partly due to the emergence of the UAE as a trade hub following the Abraham Accords. A significant amount of trade between India and Israel is now routed through the UAE. So the headline bilateral trade numbers have come down to somewhere around $3–4 billion.
But the real value of the India-Israel economic relationship cannot necessarily be measured only through merchandise trade figures. The greater potential lies in co-production, innovation, sharing technology and adapting technologies for the Indian market. Water technology is a good example. Israeli technology can sometimes be too expensive for the Indian market. Indian companies are therefore adapting Israeli water technologies to local requirements by creating domestic supply and production chains. That brings down costs and makes the technology commercially viable in India.
We can replicate this model in many other sectors. That is where I see the real potential of the economic relationship—not simply in increasing the headline trade number.
Beyond trade and innovation, infrastructure is emerging as another area of India-Israel economic cooperation. What opportunities do you see for Indian infrastructure companies in Israel?
Infrastructure is a dimension that is perhaps as important as innovation. Over the last year and a half, we have been working very hard to expose Indian infrastructure companies to opportunities in Israel because Israel itself has significant infrastructure requirements.
One example is the Greater Tel Aviv Metro project, which is worth around $50 billion. We invited Indian companies to participate in the prequalification process for the Infra-1 tenders of the metro project. Of the 22 companies, including Israeli companies, that applied for prequalification, 11 are Indian. We hope that in the coming weeks there will be announcements regarding the Indian companies that have qualified. If they clear the prequalification process, they will have a very strong opportunity to win tenders. There are around 10 Infra-1 tenders, each worth approximately $800 million.
This has the potential to create a major change in our economic relationship. Infrastructure could become an important pillar of India-Israel cooperation, bringing Indian infrastructure companies and workers into the Israeli market. Importantly, these companies will be working on projects financed by the Israeli government. They do not necessarily have to bring their own capital; they can participate in projects backed by Israeli public financing.
The conflict involving Israel and Iran has created fresh security and economic uncertainties across the Middle East. How do you see its impact on regional stability, particularly in the Gulf, and what could it mean for India’s economic interests in the region?
There is no doubt that the war has created disruptions in supply chains. As a result, we have seen some trade that was previously routed through hubs in the Gulf moving back towards Indian ports. But there is no reason for the situation to undermine the FTA. On the contrary, we want to ensure that despite the challenges in our region, our systems of cooperation become more efficient so that we can compensate for some of these disruptions.
From Israel’s perspective, we also believe that confronting the threats posed by Iran is important for the long-term stability of the region. Had we not acted against Iran following the attacks against Israel, we could have faced a much more dangerous situation in the future. Imagine a situation in which Iran possessed an arsenal of nuclear weapons along with tens of thousands of ballistic missiles and hundreds of thousands of drones. The shadow this would cast over the Gulf countries would make continued economic development much more difficult.
The Gulf is home to millions of Indian workers and is an important market for Indian companies. You cannot sustain economic development if the region is constantly threatened by destabilising forces and the proliferation of weapons. From our perspective, removing existential threats—including nuclear and ballistic missile threats—may create instability in the short term, but it can contribute to greater stability over the long term. Greater regional stability would also benefit Indian companies and Indian citizens working across the region.
Pakistan has also been expanding its engagement with countries in the Middle East, including through defence partnerships. How do you view its evolving role in the region?
We are seeing the emergence of new alignments in the region. There appears to be greater coordination among countries such as Pakistan, Türkiye, Saudi Arabia and Egypt as they respond to the changing strategic environment. There is certainly the potential for Pakistan to play a greater role in the region. We have also seen its defence pact with Saudi Arabia.
But it is important to understand that the principal security threat facing Saudi Arabia was not Israel—it was Iran, as well as the Houthis in Yemen.
There is clearly a defence deficit in the region, and countries are trying to determine how that gap should be filled. From Israel’s perspective, the region will become more stable when the Iranian threat is neutralised. Countries would then be more secure and potentially less inclined to bring external powers into the regional security equation.
Israel has been at the forefront of developing technologies to counter emerging threats such as drones, missiles and other advanced weapons. As India modernises its defence capabilities, where do you see the greatest potential for India-Israel defence cooperation?
There is a saying that necessity is the mother of invention. Israel has faced serious security challenges for a long time, and necessity has forced us to become creative and develop new technological solutions. India and Israel face some common challenges. That means we have to become more innovative and increase our cooperation so that we can expand production and improve the effectiveness of the systems we deploy.
The challenge is that adversaries are constantly developing new threats. We therefore have to remain extremely alert. The most important thing is speed. Our cooperation and our ability to develop and deploy new technologies have to move faster than the development of the threats we face.
Agriculture has traditionally been one of the strongest areas of India-Israel cooperation. How could the FTA expand this partnership, particularly in agricultural technology?
The FTA will not necessarily revolutionise agricultural cooperation because India and Israel already have a very substantial partnership in this sector. What it can do is encourage more Israeli technology companies to come to India and manufacture technological solutions here. This year, for example, we introduced several new technologies through the Centres of Excellence.
One is a system called N-Drip, which enables highly efficient irrigation without requiring external power, using gravity. We are testing this technology in the field. If it is approved by India’s Ministry of Agriculture and becomes eligible for support to farmers, it could have a significant impact. It is not a very expensive system and can improve agricultural efficiency. It can also be integrated with sensors and satellite-based monitoring, enabling farmers to receive better guidance on when to plant, when to irrigate and how to manage their crops.
We have introduced another technology aimed at improving farmers’ ability to store agricultural produce without electricity. This is particularly relevant for India because a significant amount of agricultural produce can be lost after harvesting. The technology helps extend the shelf life of produce through a specialised storage system. Technologies such as these can be particularly useful for small Indian farmers. We intend to continue expanding this cooperation.
The FTA can act as a catalyst by encouraging greater participation by the private sector and making it easier for Israeli agricultural technology companies to develop, manufacture and deploy their solutions in India.
