India, Israel to Hold Free-trade Talks

Israel and India have long had warm bilateral relations based on cultural ties and good faith, says Jyotiraditya Scindia, India's commerce minister. "Economic relations can also be established," he told TheMarker at the end of his visit to Israel last week. Indeed, the administrations in Jerusalem and New Delhi evidently feel the time is ripe to formalize trade: The sides are beginning negotiations on a free-trade agreement.

Trade between the two countries focuses on certain sectors. A new agreement would expand bilateral trade to commodities, investments and services, said Scindia, following his meeting late last week with President Shimon Peres.

During his visit, Scindia identified water technology, biotechnology and nanotechnology as key areas in which collaboration could be expanded.

Scindia also met with Industry, Trade and Labor Minister Benjamin Ben-Eliezer, and with representatives of Israel's water technology and high-tech industries. According to the Web site Diamond News, Scindia told Ben-Eliezer that Indian Prime Minister Manmohan Singh accepted an Israeli proposal, which dates from 2007, to start the talks on a free-trade agreement. The parties also agreed that the next meeting of the two countries' joint committee on trade and economics will take place in New Delhi.

Trade between India and Israel has increased by just 15% in the last five years, according to the Indian minister. But it is very narrow in focus. Almost all India's exports to Israel are diamonds, drugs and plastics, while Israel's exports to the subcontinent consist almost entirely of fertilizer, polished diamonds and gems, and electronic equipment.

"The basket of products must be expanded," Scindia said. To achieve this, talks began to achieve a "preferred status" trading agreement. But New Delhi changed policy and the Indian government now agrees to talks on a full free-trade agreement regarding commodities, investments and services, he said.

The minister says India has something to learn from Israel about water management and wants to collaborate on agriculture - from breeding "advanced" seeds to fertilization and irrigation, in which Israel is a world power.

Israel has innovative technologies and India has a wide manpower base, as well as a huge market; these are complementary abilities, Scindia said. The same is true of alternative energy: Israel has developed solar power technology, while India has worked on wind power, he noted.

Asked why India has so little investment in Israel, Scindia said the existing efforts represent a "good start" and should be expanded.

He also visited Naan DanJain Irrigation, a joint Indian-Israeli irrigation venture created by a merger of an Israeli customer, Naan Dan, and Jain of India in 2007. Kibbutz Naan owns 50% of the company, which has nine subsidiaries worldwide. After the visit to Naan DanJain, Scindia said Israel and India are both victims of terrorism and could collaborate on homeland security as well. He declined to discuss the collaboration between Israeli and Indian military suppliers, which is under the auspices of the defense ministries, not industry.