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Israel and India Move Toward Free-Trade Agreement

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Tuesday, March 9th, 2010

DSC_0013Indian Prime Minister Manmohan Singh has accepted an Israeli proposal to begin negotiations on a free-trade agreement.

In a meeting held between Ben-Eliezer, Minister of Trade, Industry and Labor and the Indian Minister of Commerce and Industry, the decision of the Prime Minister of India to accept Israel’s proposal for Free Trade Zone negotiations by the two nations was declared.

The deliberations are due to begin during the joint economic convention attended by the two nations, destined to convene this midyear.

On Wednesday, 17 February, a meeting was held in Jerusalem between the Minister of Trade, Industry and Labor, Fuad Ben-Eliezer, and the Indian Minister of Commerce and Industry, Mr Jyotiraditya Scindia.

During the meeting of Ben-Eliezer, Minister of Trade, Industry and Labor and the Indian Minister of Commerce and Industry, the latter informed of the Indian Prime Minister’s decision to accept Israel’s proposal for Free Trade Zone negotiations by the two nation.

Minister of Trade, Industry and Labor, Benjamin (Fuad) Ben Eliezer reports that “the new process for establishing a Free Trade Zone with India constitutes a breakthrough in the two nations’ trade relations. India is one of Israel’s major trade partners in Asia, and this declaration marks the beginning of negotiations for establishing a Free Trade Zone with a substantial economic power such as India, which will provide a significant anchor for Israeli-Asian foreign trade policy. An Israeli-Indian Free Trade Zone will secure a infrastructure for mutual trade between the two nations and is predicted to augment it substantially”.

The deputy managing director for the Ministry of Trade, Industry and Labor and head of the Foreign Trade Administration, Boaz Hirsch, notes that “this declaration is the product of many efforts exerted by us during an extended period of time to influence Indian policy, and also of the recent visit by Minister Ben-Eliezer this January. As early as May 2007, the State of Israel submitted a formal application to the Indian Ministry of Commerce and Industry to begin negotiations for establishing A Free Trade Zone for the two nations. A feasibility survey conducted by the two nations finds the Indian economy interested in establishing this agreement, and that the Israeli Industry provides clear advantages in actualizing the collaboration and trade potential for the two nations, to be facilitated by their establishment of a FTZ.

Israel’s entrance to Free Trade Zone negotiations with India comprises yet another spring board for Israeli exporters oriented towards the Asian market in general and the Indian in particular. We predict that the joint economic convention attended by Israel and India planned this midyear will have us reaching further agreements with the Indian party which will enhance Israeli companies’ involvement in a country as central as India.

The Ministry of Trade, Industry and Labor has in recent years declared India to be a target nation for reinforcing technological trade and collaborative relations. Since then, several notable measures for the implementation of this declaration were carried out by the Export Institute. The most prominent of these measures is the launching of the “Comet Program” in India last year, which was designed to assist exporters in infiltratingthe Indian market. This last year had seen many activities conducted under the program’s umbrella in fields such as communication, software and homeland security. This month an additional project is to be launched under the Comet Program, the Gro-Win Project, focusing on agriculture and water supply.

The Ministry of Trade, Industry and Labor is operating two commercial consulates headed by economic consuls Mouneer Agbariya in New Delhi and Elad Goz in Mumbai. Recently the announcement of an additional consulate was made, a third consulate to be established in India. These delegations, alongside additional governmental aid, will assist the many Israeli companies interested in operating within the Indian market” Hirsch further discloses that “these days a feasibility study is conducted by us to evaluate the possibility of establishing an FTZ with South Korea. We predict that attaining Free Trade agreements with these two nations will bring forward a substantial increase in Israeli export in the orient, which conforms with general global market trends”.

The Indian economy is ranked 12th globally in GDP (behind Canada and above Mexico) . In five years, India is expected to reach 8thplace and to supersede Canada, Brazil, Spain and Russia with an estimated gross product of 2.1 trillion dollars.

In 2008 the Indian market registered an economic growth of 6.1%, continuing the earlier growth of 9.3% in the preceding three years. In 2009 the recorded growth rate was 6.5%, and the GDP for that year was 1.28 trillion dollars.

Israeli-Indian trade relations: in 2009, Israeli-Indian trade transactions were valued 3 billion dollars including diamond trading transactions, a 25% decrease compared withthe preceding year. The scope of non-diamond trading transactions decreased by 14% and was estimated 1.77 billion dollars. Israeli exports to India decreased in 2009 by 10%, bearing the total value of 1.21 billion dollars, and imports were down by 26% to 558 million dollars worth of transactions.

The potential trade targets for Israel and India are: safety and security, computers and peripheral devices, agro-technology, medical and biotechnological equipment, telecommunication equipment, environmentalism and water treatment. India is ranked as Israel’s 10th largest trade partner.