India and Israel FTA yet to be finalised; Israel keen to boost exports with India
The Dollar Business Bureau
During the historic visit of Prime Minister Narendra Modi to Israel, the Middle Eastern country is looking to boost its exports by exploiting huge base of India’s middle class consumers. However, the scepticism continues in the Jewish nation due to the stalled talks on the India-Israel FTA (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," said Eli Cohen, Israeli Minister of Economy and Industry.
“The economy of India is becoming a major destination for Israel’s exports, with the country’s more than 1.3 billion citizens driven by 300 million consumers in the middle and upper-middle class, having buying power equivalent to the middle class consumers of Western countries,” Cohen stated.
Despite discussions that started about seven years ago, an FTA between the two countries is still elusive. The first round of discussions on the agreement were held on May 26, 2010.
Officials from Israel’s foreign ministry said India was ‘re-evaluating’ the pact, but has tried to downplay its importance, by saying that there are latest developments which will help in realising the true potential of economic ties between the two nations.
Prime Minister Modi, in an interview to the Israeli newspaper - Israel Hayom, had said, “India was not eyeing a "traditional import-export relationship" with the Middle Eastern 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.
India-Israel bilateral trade has increased from just $200 million in 1992, the time when diplomatic ties were established, to $4.13 billion (including diamonds) in 2016, as per the Ministry of Economy and Industry of Israel.
Exports from Israel reached $1.29 billion in 2015, however, there was a decline of 13% in 2016 with exports amounting to $1.15 billion (excluding diamonds).
According to officials, during Modi’s visit, a forum of CEOs to be formed consisting of leading Indian and Israeli companies, for creating a detailed plan for bilateral trade relations in future.
Last week, Israeli cabinet had cleared various measures to enhance economic ties with India, providing support to strengthen relations through cooperation on Research & Development (R&D) by creating a joint fund and finding out key sectors for enhanced collaboration such as agriculture, water and space technology.
Modi is on a three-day visit (from July 4-6) to Israel to commemorate 25 years of establishment of diplomatic ties between the two nations.