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Bilateral Trade Relations
Home › Economic & Commerce › Bilateral Trade Relations

India-Israel Economic and Commercial Relations

1. Since the establishment of diplomatic relations between India and Israel in 1992, bilateral trade and economic relations progressed rapidly. From US$ 200 million in 1992 (comprising primarily of diamonds), merchandise trade diversified and reached US$ 4.52 billion in 2014.

 

2. India-Israel two-way trade in 2014 increased by 3.81% from US$ 4.35 billion in 2013 to US$ 4.52 billion in 2014 (excluding defence). Balance of including diamonds in 2014 was in Israel’s favor by US$ 45 million. In 2014 India was Israel’s 10th largest import source of Israel including diamonds and 8th largest export destination including diamonds. In 2014 Israel's imports from India increased by 5.58% from US$ 2.12 billion in 2013 to US$ 2.24 billion in 2014. India continues to be a 'focus' country for Israeli Government’s increased trade efforts (along with China and Brazil).

 

3. Major exports from India to Israel include pearls and precious stones, chemical and mineral products, machinery and electrical equipment, textile and textile articles, plastics, rubber, plants and vegetable products, mineral products, rubber and plastic products, base metals and transport equipment.

4. Major exports from Israel to India include defence, pearls and precious stones, chemical and mineral products, machinery and electrical equipment, base metals, machinery, and transport equipment.

 

5. In recent years bilateral trade has increased in electronic machinery and high tech products such as communications systems, medical equipment, educational technologies, software and digital printing products.

 

6. While India's exports to Israel in areas other than diamonds are increasing, diamonds constituted 53.5%% of bilateral trade in 2014. India-Israel trade in diamonds decreased by 2.21% from US$ 2.48 billion in 2013 to US$ 2.42 billion in 2014. Nearly 40 diamond dealers have opened offices at the Israeli Diamond Exchange in Ramat-Gan. Some of these dealers have been active in Israeli for nearly 30-40 years.

 

7. Investment: According to figures released by the Department of Industrial Policy & Promotion, India, FDI inflows from Israel to India from April 2000 to December 2014 totaled US$ 77.3 million. These figures may not accurately reflect FDI from Israel, as many Israeli companies invest in India through the US, Europe and Singapore.

 

8. There were over 300 Israeli investments in India mainly in high-tech and agriculture. While the traditional business thrust in diamonds, agriculture, chemicals, information & communication technology and pharmaceuticals remains strong, there is a growing preference of Israeli companies in sectors such as water technologies, homeland security and real estate. Some Israeli companies have set up R&D centers, manufacturing plants and have opened subsidiaries of offices in India. Teva Pharmaceuticals, Truphatek, Pelamix, Huliot, Netafim and many more companies have set up manufacturing plants in India. These are some Israeli companies which are focusing exclusively on the Indian market.

 

9. Indian companies are marking their presence in Israel through mergers and acquisitions and by opening branch offices. TCS started operations in Israel in 2005 and State Bank of India opened a branch in Tel Aviv in 2007. The first major acquisition occurred in 2007 when Jain Irrigation of India purchased a 50% stake in Naan-Dan, an Israeli irrigation equipment manufacturing company. In May 2012, Jain Irrigation purchased the rest of the stake in Naan Dan, acquiring 100% stake with an investment of nearly Rs. 200 crore. India’s Sun Pharma has 66.7% stake in Israel’s Taro Pharmaceutical Industries. In 2009 India’s telecom company Tejas Networks Ltd acquired the Israeli carrier Ethernet solutions start-up, and Connectiva Systems Ltd acquired Israeli start-up Olista. In February 2015, Infosys Ltd. acquired the Israeli startup Panaya Ltd., a provider of software automation services, for $200 million. Tech Mahindra acquired the R&D arm of Comverse, a technology company that offers a portfolio of digital services and Leadcom, an Israeli company which specializes in telecommunication network services. Infosys also made an investment of USD 4 million in Cloud Endure.

 

10. In its first major investment in Israel, in April 2013 Tata Group announced an investment of US$5 million in the Momentum Fund of Ramot Technology Transfer Center at Tel Aviv University, out of the $20 million that Ramot plans to raise. The Fund will invest in ventures based on work by Tel Aviv University’s researchers.

 

11. Agreements signed between the two countries:
Since the establishment of diplomatic relations in 1992, several economic agreements were signed between Israel and India including the following:

  1. Agreement for cooperation in agriculture (1993)
  2. Agreement for Promotion and Protection of Investments (Jan 1996)
  3. Avoidance of Double Taxation and for the Prevention of Fiscal evasion with respect to taxes on Income and on Capital (Jan 1996)
  4. Bilateral Agreement regarding Mutual Assistance and Cooperation in Customs Matters (1996)
  5. Agreement on Cooperation in Peace Uses of Outer Space (2002)
  6. Agreement for Cooperation in the field of Protection of the Environment (2003)
  7. MOU on India-Israel Research and Development Fund Initiative (2005)
  8. Amending protocol to the Double Taxation Avoidance Agreement (2015)
  9. Third phase of India-Israel bilateral action plan in agriculture (2015)


12. Recent visits/events:

  1. India Pavilion in First Israel Innovation Conference or MIXiii 2014 from 20-22 May, 2014- showcasing India’s high-tech capabilities: Mearly 35 exhibitors from India including private companies, SMEs, Government R&D organisations, Trade Promotion Departments, a Venture Capital Firm and others participated in the India Pavilion which was the largest country pavilion in MIXiii 2014. Confederation of Indian Industry (CII) and the Global Innovation and Technology Alliance (GITA) assisted the Embassy.
  2. India's Home Minister Shri Rajnath Singh visited Israel from 5-7 November 2014. He met with Prime Minister Netanyahu to promote capacity building, training and building a hi-tech partnership between the two coutnries.
  3. Israel’s Minister of Agriculture and Rural Development, Mr. Yair Shamir visited the "Vibrant Gujarat" summit between 11-13 January, 2015. During his visit, the third phase of the Indo-Israel Agricultural Cooperation Project was agreed upon.
  4. Mr. Amit Lang Director General of Israel's Ministry of Economy visited India from 9-12 February 2015 to promote new collaboration between India and Israel.
  5. February 2015 Israeli Defense Minister, Mr. Moshe Ya'alon visited the biennial 'Aero India' Show in Bangalore and held high-profile meetings with PM Narendra Modi. This was the first visit by an Israeli Defence Minister to India.
  6. Chief Ministers of Maharashtra and Meghalaya visited Israel in April, 2015 for Agrtitech-2015. Almost 1,000 delegates attended the international exhibition in agriculture.
  7. President Pranab Mukherjee visited Israel in October, 2015. In addition to high level meetings he witnessed the signing of two agreements including the amending protocol to DTAA. Eight educational agreements were also concluded during the visit.
  8. The 8th Meeting of the India-Israel Forum (IIF) was held in Israel in October, 2015. Industry leaders from both countries including representatives from Tata, Reliance etc attended the forum. On the Indian side, the forum is chaired by Jamshyd Godrej, Chairman Godrej & Boyce . The Forum is an annual event organized by CII and the Tel Aviv University, alternately in New Delhi and Tel Aviv.
  9. External Affairs Minister Sushma Swaraj visited Israel from January 16-19, 2016.
  10. Industries Minister of Odisha led a delegation from January 30-February 3, 2016 to explore business opportunities in Israel.

 

Cooperation in Agriculture and Water Technologies:

 

13. Agriculture: Under a comprehensive Work Plan for cooperation in agriculture signed on 10 May 2006, bilateral projects are implemented through MASHAV (Center for International Cooperation of Israel’s Ministry of Foreign Affairs) and CINADCO (Centre for International Agricultural Development Cooperation of Israel’s Ministry of Agriculture and Rural Development). Agricultural cooperation was formalized through three year work plans.

 

14. The Action Plan for 2012-2015 expanded cooperation to various States in India. Under this Action Plan, Israel agreed to set up 28 Centers of Excellence across seven states by 2015. These Centers were spread across different fields and already 15 such Centers have already been commissioned. These Centers demonstrate an integrated and scientific approach to farming. In Maharashtra, Centers of Excellence was set-up for Mango at Ratnagiri; Citrus at Akola; and Pomegranate at Rahuri. A Center of Excellence for vegetables was set up in Karnal, Haryana. In Sirsa, Punjab the Center for fruits was established. Third phase of agricultural work plan (2015-18) was signed in September, 2015. Israel will set up a Center of Excellence in Dairy management in Haryana under this work plan.

 

15. India benefited from Israeli expertise in integrated and scientific approach to farming, horticulture mechanization, protected cultivation, soil treatment, orchard and canopy management, nursery management, micro-irrigation and post-harvest management. Visits of Israeli experts and capacity building programs for Indian farmers and experts in India and Israel were key factors which resulted in a successful program.

16. Indian official and business delegations regularly attend Israel’s triennial international agricultural exhibition event Agritech, which showcases Israel’s achievements in agriculture. In Agritech 2015 (April 28-30) in Tel Aviv, India’s participation included the Chief Ministers from Maharashtra and Meghalaya and delegations from Telangana, Mizoram and Punjab.

17. There are many joint ventures in the agriculture sector. Israel agricultural irrigation equipment is manufactured in three different locations in India and Israeli greenhouse technology and new species of seeds are widely sold. MASHAV, is active in India with many experimental and demonstration projects. MASHAV operates an agricultural demonstration farm in Pusa and regularly runs courses on developing small and medium sized businesses in rural areas.

 

18. In January 2014 NaanDan Jain Irrigation was awarded the Ramthal-Marol Integrated Micro Irrigation Project in Karnataka. This project is based on the unique concept of integrated micro-irrigation and will be the largest micro-irrigation project of its kind in the world for improving water use efficiency in canal command areas through conduit distribution and use of Micro Irrigation. In addition, in January 2014, the Indian unit of Netafim Irrigation won a $62 million water project contract in the state of Karnataka to build an automated water pipeline network to more efficiently drip-irrigate 11,800 hectares of land in the Bagalkot area of Karnataka. The project will assist 6,000 farmers through a simultaneous release of water so that growers even at the end of the network get the same amount of water as those closer to the supply source.

 

Water Technologies

19. Given Israel’s novel and efficient water technologies for waste water management, recycling waste water (75%), desalination, water security, and water conservation, there is ongoing cooperation between the two countries. India’s companies and official delegations regularly visit the biannual event WATEC in Israel which showcases Israel’s water and energy technologies.

 

20. In February 2012 the Ministry of Urban Development in India and the Ministry of Industry, Trade and Labor signed a Joint Declaration for cooperation in water technologies. Under the Joint Declaration, the first meeting of JWG was held on 3-6 Dec 2012. An Israeli industry delegation visited India in March 2013 to discuss possibilities of collaboration in water treatment for the textile industry and in urban waste water treatment.

 

21. Israeli company IDE has built several desalination plants in India. A 100 MLD per day desalination plant set up by IDE at Nemelli in Tamilnadu was commissioned in 2013, the second such plant in Chennai. IDE’s seawater reverse osmosis solution will be used to expand India’s target desalination plant at Reliance India’s Jamnagar oil refinery J3.

 

22. Israel’s national water company Mekorot, is providing its expertise to concerned organizations in Greater Mumbai and West Bengal. In August 2013, Government of Rajasthan and Mekorot signed an MOU for joint development of waste water reuse capabilities and infrastructure facilities integrated development of opportunities for high tech agriculture in Rajasthan.

 

23. In July 2015, Tahal group signed a US$ 74 million deal with the Karnataka Government to design, construct and operate a water supply system to 131 villages in the State.

 

Industrial and R&D Cooperation

24. Under a bilateral agreement in May 2005 the India-Israel Initiative for Industrial R&D (i4RD) was set up to support joint industrial R&D projects, aimed at development of products or processes leading to commercialization in the global market. This cooperation agreement was signed between the Ministry of Science and Technology, Department of Science and Technology (DST), India and the Ministry of Economy, Israel. i4RD provides partner matching services and funding for joint bilateral research and development (R&D) projects, involving at least one Indian and one Israeli company.

 

25. The framework is jointly implemented by Global Innovation and Technology Alliance (GITA), and MATIMOP, Israeli Industry Centre for R&D. Currently funded projects are focused on the hi-tech sector, for development of both software and hardware technologies.

 

26. In March 2013, under an MOU between MATIMOP, on behalf of the Office of the Chief Scientist (OCS) in Israel; and the Karnataka Science and Technology Promotion Society (KSTePS) and the Karnataka State Council for Science and Technology (KSCST), the Karnataka-Israel Industrial R&D program was set up to provide partner matching assistance and access to funding for industrial R&D by Israeli and Indian companies based in Karnataka.

 

January, 2016

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