Israel is eyeing the strong middle class base in India to boost its exports, capitalising on the the momentum generated by the “historic” visit of Prime Minister Narendra Modi, but scepticism persists here due to stalled discussions on a Free Trade Agreement.
“India is a key export market for Israel. Tightening relations with India and this historic visit of the Indian Prime Minister will lead, beyond increasing security exports, to growth in trade in goods and services,” Israeli Minister of Economy and Industry Eli Cohen said.
“The Indian economy is becoming a prime destination for Israeli exports, with its 1.3 billion consumers led by 300 million citizens in the middle and upper-middle class, with purchasing power equal to the middle class of Western economies,” Cohen noted.
An FTA between the two nations has remained elusive despite negotiations having started around seven years ago. The first round of negotiations were held on May 26, 2010.
On a question regarding the long-pending pact, Israeli foreign ministry officials said India was “re-evaluating” it, but tried to downplay its significance, saying there are newer developments that will help realise the economic potential between the two countries.
In an interview to the pro-government newspaper Israel Hayom, Prime Minister Modi had said India was not looking at a “traditional import-export relationship” with the Jewish nation.
“It is more than a buyer-seller relationship. We are more interested in a tech-based partnership with an emphasis on ‘Make in India.'” he had said.
According to the Israeli Ministry of Economy and Industry, trade between the countries has grown from USD 200 million in 1992, when diplomatic relations were established, to USD 4.13 billion in 2016 (including diamonds).
Israeli exports reached USD 1.29 billion in 2015, but there was a 13 per cent dip in 2016 with exports totalling USD 1.15 billion (excluding diamonds).
A CEO forum of leading Israeli and Indian companies is to be formed during Modi’s visit which, as per officials, is going to shape the road map for future bilateral trade cooperation.
The Israeli cabinet last week approved several measures to increase economic cooperation between the two countries, extending support to deepening ties through collaboration on R&D through creation of a joint fund and identifying key sectors like water, agriculture and space technologies for enhanced collaboration.