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Overview of India-Israel Bilateral Trade and Economic 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 in 1992 (comprising primarily of diamonds), merchandise trade has diversified and had increased sharply reaching US$ 4747.1 million in 2010 (an increase of 59.92% compared to 2009, US$ 2968.3 million).

In 2010, India stood at the sixth place in terms of Israel’s trade partner countries and the third largest trade partner in Asia after China and Hong Kong (trade data includes diamonds) and remained a ‘focus’ country of the Israeli Government for increased trade effort. In 2010, India was ranked 9th largest import source of Israel including diamonds, and 14th largest import source excluding diamonds. In addition, India was ranked 4th largest export destination of Israel (including diamonds) and 5th when excluding diamonds (in Jan-Dec 2010). While India’s exports to Israel in areas other than diamonds have increased over the years, Diamonds still constituted around 49% of the bilateral trade in the year 2010.

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

According to figures released by the Department of Industrial Policy & Promotion (Government of India), FDI inflows from Israel to India from April 2000 to March 2011 totaled US$ 53.14 million placing it at 38th rank (0.04% of total FDI inflows to India). These figures, however, may not accurately reflect the FDI from Israel, as a number of Israeli companies also invest in India through the US and Europe route. While the traditional business thrust in diamonds, agriculture, chemicals, information & communication technology & pharmaceuticals remained strong, there is a growing interest from Israeli companies in clean energy, water technologies, biotech, nanotech, homeland security, real estate, infrastructure and financial services.

 

Israel’s Export to India -2010

Israel’s export to India in 2010 is highly skewed by Machinery & Equipments trade which stands at 40% of the total export. Machinery & Equipments and Chemical’s & Fertilizer’s contribute to 40% and 35% of total Israel’s export to India. Over all the two sectors together exports about 3/4th part i.e. 75% of total Israel’s export to India is in these two category segment.

 

Israel’s Export to India -2011

Not surprisingly Israel’s export to India is again highly skewed by Machinery & Equipments trade with growth 40% of the total export. Machinery & Equipments and Chemical’s & Fertilizer’s contribute to 40% and 36% of total Israel’s export to India. Over all the two sectors together exports about 3/4th part i.e. 75% of total Israel’s export to India is in these two category segment. A substantial portion of Mineral product, metals and vehicles also contribute to 4%, 5% and 4% of total Israel’s export to India.

 

Israel’s Import from India-2010

Israel’s import from India in 2010 is highly skewed towards Chemical’s & Fertilizer’s trade which eventually comprises of 34% of the total import. A substantial portion of Vegetables, Vehicles, Plastics and other’s also contribute to total import by 6%, 17% and 14% respectively.

 

Israel’s Import from India-2011

Similarly Israel’s imports from India in 2011 are again highly skewed towards Chemical’s & Fertilizer’s trade which eventually comprises of 36% of the total import. A substantial portion of Vegetables, Vehicles, Plastics and other’s also contribute to total import by 5%, 17%, and 14% respectively.

 

Israel’s Export and Import-2011

The month of September is considered a slow month in terms of business activities when many people take their annual vacations (since schools are closed) and many business and organizations are either closed or work on a partial capacity.

During Jan-Sep 2011, India was ranked the 8th largest trade partner of Israel in the world, and the 3rd largest trade partner in Asia following China and Hong Kong.

 

Israel’s Global Trade during Jan-Sep (in US$ millions)

 

Israel’s top trade partners in Jan-Sep 2011 (in US$ millions)

 

India’s Top Trade Partners

 

India – Israel Bilateral Relations

  • 1992 Establishment of diplomatic relations
  •  3991 Agreement on Cooperation in Agriculture
  • 1994 Agreement on cooperation in Telecommunication
  • 1994 Agreement on Economic and Commercial cooperation
  • 1996 Agreement on Promotion and Protection of Investments
  • 1996 Avoidance of Double Taxation and for the Prevention of Fiscal evasion with respect to Taxes on Income and Capital
  • 1996 Bilateral Agreement regarding Mutual Assistance and Cooperation in Customs Matters
  • 1996 Framework Agreement for Cooperation in R&D
  • 2002 Agreement on Cooperation in Peace Uses of Outer Space
  • 2003 Agreement for Cooperation in the field of Protection of the Environment
  • 2003 Agreement for cooperation in Medicine and Health
  • 2005 MOU on India-Israel R&D Fund
  • 2006 Agricultural cooperation Three-year Work Plan