The accelerated FTA negotiations coincide with 20 years of the establishment of full diplomatic relations between the two countries.
The bilateral free trade pact will be focusing on goods, services and investments.
"The FTA is expected to expand the basket of goods that will be traded and create significant and substantial business opportunities for traders and businesspersons of both countries," the Israeli Embassy said.
In the last two decades since the two countries established diplomatic ties, bilateral trade has shown an exponential increase to over USD5 billion from just USD180 million in 1992. Trade between the two countries encompass diamonds, chemicals, machinery, IT and agro-technologies.
"India is of Israel's most important trade partners. Israel's industry is keen to expand its activity in India, and we see a growing interest on both sides for co-operation in various sectors, including water and energy technologies, ICT, and agriculture," said Yonatan Ben Zaken, Israel's commercial attache.