Marking 30 years of full diplomatic relations in 2022, India-Israel commercial ties have further bolstered as talks around the possibility of a free trade agreement (FTA) have picked up pace. More recently, both countries have started to engage with each other outside the prism of geopolitics. Israel’s technological prowess and agricultural advancement techniques are of immense significance to a rapidly digitizing India.

Recent developments between India-Israel

• As India and Israel prepare for an FTA, Israel wants to leverage synergies between India’s manufacturing potential and Israel’s technological know-how. Naor Gilon, Israel’s Ambassador to India, on June 29, 2022, expressed Israel’s desire to share technology for the success of India’s flagship program ‘Make in India’. At the same time, he also expresses concerns around violation of Intellectual property norms.
• On July 14, 2022, India and Israel, along with the United Arab Emirates (UAE), and the United States, convened for the first leaders’ meeting of the I2U2 group, which was established in October 2021. The group has focused on launching initiatives focusing on food security as well as clean energy. I2U2 group will also advance hybrid renewable energy project in Gujarat state (India), consisting of 300 megawatts of wind and solar capacity.

India-Israel bilateral trade trends

India is Israel’s third-largest trade partner in Asia and seventh largest globally. Bilateral trade between the countries has been strengthened on the back of strategic and mutually significant sectors like defense, security, agriculture, information technology (IT), etc. As per statistics, India-Israel bilateral merchandise trade grew from US$200 million in 1992 to US$7.86 billion during the financial year (FY) 2021-2022, with the balance of trade being in India’s favor.

Source: Ministry of Commerce and Industry, India

What are the major items traded between India-Israel?

Major exports from India to Israel include diamonds, precious stones and metals, chemical products, textiles and textile articles, refined petroleum, broadcasting equipment, electrical and electronic equipment, packaged medicaments, organic chemicals etc.

In fact, trade in diamonds constitutes nearly 40 percent of bilateral trade. Major imports by India from Israel include precious stones and metals, chemicals and mineral products, base metals, machinery and transport equipment, potassic fertilizers, integrated circuits, pesticides, navigation equipment, electrical and electronic equipment, weaponry and defense equipment, etc.

Investment trends between India-Israel

Israeli investments in India

As of March 2022, India received foreign direct investment (FDI) worth US$270.91 million from Israel during the period from April 2000 – March 2022. As per data from the Indian government, there are over 300 investments from Israel in India, mainly in the high-tech domain and in agriculture, further allocated into various sub-domains like manufacturing plants, research and development (R&D) centers, subsidiaries etc.

New sectors, such as water technologies, homeland security, and real estate, are showing an increased preference for Israeli know-how and expertise in addition to traditional areas of engagement, such as agriculture, chemicals etc.

Israeli companies, including Teva Pharmaceuticals, IDE, Netafim, ADAMA etc., are among those who have made notable investments in India.

Indian investments in Israel

India too has been expanding its economic presence in Israel. In July 2022, Adani Ports and Special Economic Zone Ltd (APSEZ), a joint venture India’s Adani group and Israel’s Gadot Chemicals Tankers and Terminals Ltd, won the bid for Haifa Port at US$1.18 billion. Haifa is Israel’s second largest port and serves as a major trade hub on the country’s Mediterranean coast. The city is Israel’s transportation and industrial center and a key railway hub along the Mediterranean. Interestingly, China too has recognized the significance of the region and in 2021, China’s Shanghai International Port Group (SIPG) inaugurated the neighboring Bay Port container shipping terminal, with an investment of US$1.67 billion.

As of September 2019, cumulative Indian investments in Israel totaled US$118 million. Indian software companies, notably TCS, Infosys, Tech Mahindra, and Wipro, are beginning to expand their presence in the Israeli market. Many other Indian companies have acquired significant stakes in their Israeli counterparts. For example, Jain Irrigation fully acquired NaanDan, an Israeli irrigation equipment manufacturing company and Sun Pharma, which acquired 66.7 percent stake in Israel’s Taro Pharmaceutical Industries.