The two countries had decided on the FTA during the recent visit of External Affairs Minister S M Krishna to Tel Aviv.
"There is another round of negotiations towards the end of March and I hope both sides will do their best and by the end of this year we will sign the (FTA) agreement," Israeli Ambassador to India Alon Ushpiz said.
Speaking on the occasion of 20 years of diplomatic relations between the two countries, Ushpiz said the agreement will lay the foundation for the two countries to achieve the mark of $10-15 billion dollar trade per year.
"Once this is signed, we are going to climb from $ 5 billion year to $ 10-15 billion dollar a year. It was the target which was agreed upon during the visit of External Affairs Minister Krishna," he said.
He also said that his country would soon open a Consulate in Bangalore to focus on activities such as homeland security and high tech agriculture.
Krishna visited Tel Aviv early this month, the first such trip to that region by an Indian Foreign Minister in over a decade.
On the achievements made during the two decade-old relations between the two countries, Ushpiz said, "What we have done in last 20 years is mind-boggling. We have started not from scratch but not from very high levels when it comes to trade."
"In 20 years we have come from $ 180 million to more than $ 5 billion. 2011 was the first year when we surpassed the line of $ 5 billion," Ushpiz said.