India has emerged as the second-largest export destination for Israel. Both the countries have already begun negotiations to further improve the trade, which is expected to triple to $12-14 billion in the next four years. In an exclusive interview with Sanjay Jog, Consul General of Israel, Orna Sagiv, spoke about the future trade and investment prospects. Edited excerpts:
Where does India-Israel trade stand today?
India has become the second-largest export destination for Israel in the first semester of 2010 and our exports to India have increased by 102 per cent. There has been a surge in demand from India for chemicals, high-tech equipment, metals, transport equipment and machineries. There is also a 35 per cent surge in the Indian exports to Israel.
The current bilateral trade between Israel and India is around $4.4 billion and is expected to cross $5 billion by the end of 2010. Considering that the bilateral trade was $180 million in 1992, when the full diplomatic relations between the two countries were established, the growth so far has been phenomenal. Israel may offer India state of the art technologies and we hope that as a result, there is going to be an increase in the flow of foreign direct investments from India to Israel.
What’s the trade potential between the two countries?
The trade potential between the two countries is enormous as the two economies are not competing, but complementing each other. Starting from agro technology to aerospace technology, both countries have a lot to offer to each other. India and Israel are making steady progress towards signing a free trade agreement.
Both countries have already begun negotiations and the agreement is expected to triple the annual bilateral civilian commerce to $12-14 billion in the next four years.
What are the major constraints faced by Israeli companies in India? Have you taken up these issues with the Indian government?
Israeli companies wishing to work in India must find suitable local partners and sometimes finding the right partner is not an easy task. Another obstacle lies in understanding the Indian laws and regulations, especially those concerning foreign direct investment and tariffs. These constraints can be solved mutually by increasing connectivity, flow of economic information and creating further awareness about each others’ strengths.
Israeli companies want to make investments directly or through joint ventures in India...
Israeli companies in India usually look for joint ventures, since it gives them a chance to get connected with well-established Indian companies, which can support their innovations and distribute their products in India. Many Israeli companies wish to establish joint ventures after laying the initial foundation of mutual trust, since they believe there are many advantages of benefiting from each others’ expertise by doing business together in India.
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The total investments by Israeli companies in India have been around $4-5 billion in the past eight years in sectors like agriculture, water management, real estate, life sciences, homeland security, telecom and information technology.
How are Indian companies doing in Israel?
Some Indian companies have already discovered the potential of Israel and set up offices there. Recently, there was news that the State Bank of India achieved break-even within two years of its operation in Israel. To do so is remarkable, taking into consideration the economic slowdown grappling the world in the last two years.
Though the takeover of Israeli pharma company Taro went through a stormy weather, the Israeli Supreme Court recently gave a decision in favour of Sun Pharmaceuticals, underscoring a fair litigation process. TCS and Jain Irrigation have big operation centres in Israel.
We are looking forward to see more leading Indian companies investing in Israel in the near future. Israel’s branding as a high-tech economy or a start-up nation has got registered in India, and I believe the full potential is still to be exposed.