India-Israel Economic and Commercial Relations

Since the establishment of diplomatic relations between India and Israel in 1992, bilateral trade and economic relations have progressed rapidly. From a base of US$ 200 million comprising primarily of diamonds in 1992, merchandise trade has diversified and increased rapidly reaching US$ 1,273 million in 2002. With the exception of 1995 and 2001, trade volumes have grown every year. A chart showing bilateral trade since 1992 is given below (in US$ million):

  1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Jan-Nov.
India's exports 75 129 151 190 251 293 343 455.0 534.5 429.5 653.2 806
Israel's exports 127 228 363 313 311 365 334 536.3 551.0 458.4 619.8 644
Total Bilateral 202 357 514 503 562 658 678 991.3 1085.8 887.9 1273 1450
Trade Balance -52 -99 -200 -125 -65 -90 9.3 -81.5 -16.2 -28.9 33.4 +162
%change   77 44 (-)2 12 17 3 46 9.5 (-)18 40.97 26.9

Bilateral trade in 2002: In 2002, two-way trade between India and Israel grew by 41% to over $ 1,273 million, setting a new record. This was more than 6 times the bilateral trade in 1992. India's exports of $653 million in 2002 were 52% higher than 2001. The non-diamond component of India's exports grew by over 14%. In 2002, India moved up three places to emerge as the 11th largest global trading partner of Israel as compared to 14th in 2001 and 3rd in Asia after Hong Kong and Japan, overtaking China. India's export performance assumed significance seen in the context of declining Israeli imports due to its economic difficulties. India increased its share in Israel's total bilateral trade worldwide from 1.4% in 2001 to over 2% in 2002. India's exports constituted almost 2% of Israel's imports in 2002 as compared to 1.3% in 2001. In 2002, India's trade surplus with Israel was over US$ 33 million.

While diamonds constituted about 65% of India's exports to Israel, the other major products were textiles ($ 80 million), chemicals ($ 46 million), rubber and plastic products ($23 million), machinery ($ 15 million) and base metals ($ 14 million). Areas of significant growth in India's exports were prepared foodstuffs (173%), rubber and plastics (145%), diamonds (88%), machinery (85%), transport equipment (78%) and chemicals (32%).

Israeli exports to India grew by 31% from $473.5 million in 2001 to $619.8 million in 2002. Israel's exports excluding diamonds increased by over 7%. Principal items exported by Israel were diamonds ($ 400 million), machinery ($ 98 million), chemical products ($ 69 million) and optical, medical and other equipment ($ 21 million).

Trend in 2003: From the statistics available for the first 11 months of 2003, bilateral trade increased by 26.9% from $ 1142.6 million in 2002 to $ 1450 million in 2003. India's exports to Israel increased by 34.6% from $ 598.6 million to $ 806 million. India's non-diamond exports increased by almost 16.3% and trade surplus with Israel was over $ 162 million. India's share in Israel's two-way trade worldwide grew to 2.4% in 2003 as compared to 2% in 2002. Indian exports' share in Israel's imports worldwide increased from 2% in 2002 to 2.4% in 2003. India is now Israel's 2nd largest trading partner in Asia after Hong Kong, overtaking Japan also.

Investment and Technology Cooperation

In terms of approved investments, during the period 1991 - May 2003, Israel, with Rs 42,460 million in approved investments for 96 proposals, was the 14th largest foreign investor in India. Israel is also a source of technology collaborations for Indian companies. Since 1991, over 73 technology collaboration agreements have been approved between Indian and Israeli companies. The list of approved investment and technology collaboration proposals include inter alia, sectors such as agriculture, IT, Telecom, bio-tech, medical equipment and chemicals.

Earlier this year, Ness Technologies, the biggest software company in Israel, acquired Apar Infotech, a US-headquartered Indian company which has two CMM-5 level (the highest level) software development facility in India, in a deal worth US $ 78 million. Apar, with a staff strength of 1200, has merged with Ness. In July 2003, FIPB approved the acquisition of Regent Pharmaceuticals Ltd., a part of the JK Group, by Teva Pharmaceuticals of Israel, one of the largest generic drug manufacturers in the world, for Rs 400 million.

India-Israel cooperation in the field of agriculture has been extensive. Israeli side has completed a Demonstration Farm project in PUSA at a cost of US$ 2 million. During PM Sharon's visit it was agreed to establish a Joint Committee on Agriculture. We also accepted the Israeli offer to do another joint agriculture project.

An MoU on cooperation in R&D in the electronics and IT sector was signed in January 2002. India has become an attractive destination for telecom investments by Israel. Leading Israeli companies like Comverse and Atrica have won large Indian contracts in this sector.

The India-Israel Agreement on cooperation in peaceful uses of outer space was signed in October 2002. Several joint activities in this field, including an Israeli payload on an Indian satellite, are being considered in this field.

The India-Israel Joint Work Programme of S&T cooperation for 2003-04 was signed in November 2002, which identified 10 new projects for joint work in genomics. Joint work in nanotechnology and S&T Policy Management is also envisaged.


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