Negotiations for a proposed Free Trade Agreement (FTA) between India and Israel have moved into a new formal phase, with the first round of talks underway in New Delhi from February 23 to 26 following the signing of a Terms of Reference in November 2025 that set a structured framework for discussions. The negotiations cover trade in goods and services, rules of origin, sanitary and phytosanitary measures, customs procedures, and other technical barriers, signaling a renewed push to deepen economic ties between the two countries.
Officials and trade experts said the talks go beyond traditional merchandise exchange to explore cooperation in textiles, apparel, agriculture technology, water management, high-tech manufacturing, and digital services, reflecting a strategic approach to strengthening bilateral engagement. Although the agreement has not been finalized, Israeli officials have expressed optimism that a deal could be concluded later this year, hinging on progress in these early rounds and subsequent negotiations.
The current bilateral merchandise trade between India and Israel, valued at around $3.6 billion in the latest fiscal year, has seen growth in recent years but remains modest relative to larger trade partnerships. Analysts said an eventual FTA — when agreed and implemented — would grant Indian exporters preferential or duty-free access to the Israeli market, particularly for textiles, apparel, home textiles, and other manufactured goods, where tariffs can currently add cost disadvantages.
Also Read: BGMEA Seeks Policy Support in Finance Ministry Meeting
In addition to textiles and apparel, sectors such as agri-tech, water technology, defense-related manufacturing, digital services, and high-tech equipment are expected to benefit significantly from the FTA. The agreement is seen as a platform to boost innovation-driven exports, joint ventures, and technology transfer, complementing traditional merchandise trade.
For Bangladesh’s ready-made garment (RMG) sector, the looming agreement poses a potential competitive challenge in the Israeli market over the medium term. Bangladesh already exports garments worldwide, but Israel has not been a major destination, limiting short-term exposure. However, if Indian suppliers gain tariff preferences under the FTA, they could price more aggressively, especially in cotton-based garments and basic apparel categories, squeezing some buyers that source from Dhaka. Experts caution that while immediate disruption is unlikely, increasing Indian share in Israel’s textile imports could gradually pressure Bangladeshi exporters in that specific market segment once the pact comes into force.
Bangladesh’s RMG industry remains heavily oriented towards larger markets such as the European Union and the United States, where its competitive advantages are more deeply entrenched. Nonetheless, industry observers say Dhaka will be watching the India–Israel negotiations closely as part of broader regional trade developments that could reshape apparel sourcing and competitive dynamics across multiple export destinations.
