The Hindu Business Line : India-Israel tango gains pace

The economic engagement between India and Israel is set to deepen with several Indian ministers evincing keen interest in leveraging the best of both in terms of technical manpower and technology to address low-productivity agriculture, assured water supply to farmers, potable water to the people, and medicine for public health in India.

In the last couple of years, UPA Government Ministers Mr Sharad Pawar, Mr Kamal Nath and Mr Kapil Sibal visited Israel in a bid to take bilateral engagement to a higher gear.

The Federation of Indian Chambers of Commerce & Industry (FICCI) led a business delegation headed by the Minister of State for Industries, Mr Ashwani Kumar, during August 5-6 to Tel Aviv to explore trade and investment opportunities for mutual benefit.

A joint business forum was also launched during this interaction, in which a large number of Israeli entrepreneurs and Indian companies exchanged ideas about synergising each other’s strengths for cooperation and to leverage their advantages for sharpening global competitiveness.

Over 150 agreements

The Israel Export and International Cooperation Institute Chairman, Mr David Arzi, told Business Line recently in Tel Aviv that there are now more than 150 agreements between Israeli and Indian firms on cooperation and joint project s in fields such as agriculture, communications, software and medical equipment. He proudly noted that India is “one of our main target markets for growth and development of trade, industrial cooperation and joint projects in infrastructure.”

Ever since the upgradation of diplomatic relations between the two in 1992, bilateral trade, which was $200 million then, has grown to $2.7 billion today. The earlier dominance of diamond trade has given way to a more diversified product basket covering machinery, pharmaceuticals, hi-tech products, software, telecommunications, biotechnology and medical equipment. In the last year, there has been huge investment interest from Israel in India’s infrastructure and real-estate and if things go well, Israeli investments in India would be $1 billion.

The Indian Ambassador in Israel, Mr Arun K Singh, said his interaction with CEOs of Israeli companies convinced him that they “are not looking at their investment just with an eye on the Indian market but have realised that to remain globally competitive they have to do a certain amount of research and development.”

Already NDS, specialising in digital video recorders, interactivity and secure broadband, has an office in Bangalore and more such R&D centres in other sectors are expected to come up as Israel seeks greater engagement with India. Mr Singh said that both countries co-operate well in the area of science and technology.

Joint fund

In 2005, a joint fund with a contribution of $1 million from each side was set up, under which Indian and Israeli companies would come together to make a bid for funding R&D for industrial applications. Already, four sets of companies have been funded. The Indian Embassy in Israel is now working in coordination with the Confederation of Indian Industry (CII) for a business delegation visit from India in November to look at start-ups and venture capital funds with a view to understanding and deriving benefits. No doubt, in terms of technology, product innovation and start-ups, Israel is in the top league but it does not have manpower as the total population is 7 million, whereas India is adding seven million new mobile phones every month.

As Israel is good at developing products and India in servicing hi-tech areas, making companies come together for mutual benefits would result in a win-win for both. This is evidenced by the recent acquisition of three Israeli companies by private Indian firms in irrigation equipment manufacturing, pharmaceuticals and tyre manufacturing. With Indian companies scouting for global operations, more such alliances are possible.

Mr Illan Maor, Director of Economic Department, Israeli Ministry of Foreign Affairs, said Israel has 2,000 start-up companies today, the second highest in the world, after the US. Israel’s reputation for quality and its technology-savvy position for small and medium enterprises (SMEs) would be of great value to Indian companies looking to become global players in manufacturing.

Indian sense of time

A caveat is in order. According to Mr Amnon Ofen, a consultant engineer with rich experience doing business in India for his Israeli clients, the single big obstacle to forging any such joint ventures is the Indian ‘business sense’. He says, somewhat in a lighter vein, that in Indian terminology, time could mean now, later or the next cycle, while companies in Israel seek swifter decision-making, both at the government and organisation level. He says many large global venture capital funds scouting for investment opportunities base their operations from Israel.

Indian companies would need to align with Israeli firms and through this they could enjoy all the associated benefits of Israeli trade pacts and exports to the US and to Europe. The potential for active collaboration between Israel and India is quite substantial, he feels.

“Indian and Israeli companies that get to know the respective business cultures and which are assisted by those who know the market would be able to exploit more fully Israeli brainpower, knowhow and capital, together with the excellent production possibilities in India.”

Ready for partnership

After his official engagement in Tel Aviv, a relaxed Minister of State for Industry, Mr Ashwani Kumar, said the visit was useful in promoting each other’s perceptions a shade better.

In the coming months, more efforts would be made for cooperation in solar energy, water technology and agriculture, including organic agriculture, and for fuel.

A satisfied Mr Kumar recalled his one-to-one meeting with the President of Israel and the Nobel Laureate for his peace initiative in West Asia, Mr Simon Peres. Remembering the observation made by Mr Peres to the effect: “The Indian achievement of economic growth is a unique example of a nation not compromising on its democratic ethos and cultural values, while pursuing the path of economic prosperity”, Mr Kumar responded to the President thus: “The Indian story is as much about standards of life as it is about living standards of its people. While we want to improve the living standards of our people, we don’t want to substitute our values and standards of life”.

Mr Kumar got a personal assurance from Mr Peres himself that “in every sphere of economic activity, including access to advanced nanotechnology, biotechnology, medical science, water resource management and agriculture technology, Israel is ready and willing to offer any kind of partnership that India desires.” With friends in the highest echelons of government offering unstinted support to India, “the sky is the limit” for marrying the best of both, aver diplomats.

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