logo logo

India prioritises Israel on trade pact

Financial Times | February 12 2010

India prioritises Israel on trade pact

By James Lamont and Martin Wolf in New Delhi

India is to launch negotiations on a bilateral trade agreement with Israel in what is one of the most tangible symbols of fast-warming relations between the two countries.

Rahul Khullar, India’s commerce secretary, said New Delhi was prioritising a deal with Israel from among a list of about 20 countries seeking improved trade ties with one of the world’s fastest growing large economies.

"I’ve just had authorisation to open up negotiations with Israel and New Zealand," Mr Khullar told the Financial Times.

India, which has traditionally taken a leadership position in the Non-Aligned Movement and held deep sympathies with the Palestinian cause, only opened formal diplomatic relations with Israel in 1992.

Bilateral trade between India and Israel has risen quickly, reaching about $4.1bn in 2008, excluding a growing defence trade. A more formal agreement would give India’s manufacturers greater access to Israel’s high-technology sector, while Israel would benefit from better trade and investment prospects in India’s domestic market of 1.2bn people.

An Israeli official said a trade agreement had been "under discussion for quite some time". He predicted bilateral trade could rise to $12bn (€8.5bn, £7.5bn) within five years once a pact was in place. Among other areas, Israel has agricultural technology that would assist Indian farmers in boosting productivity.

Trade negotiations with New Delhi are a big step for Israel. It already has bilateral trade agreements with the US, European Union, Canada and Jordan.

India has signed two similar agreements, with the Association of South East Asian Nations regional grouping and South Korea.

"Japan and Europe are next," said Mr Khullar. "Both are clear prospects for this year. [Negotiations with] Canada will kick off by summer."

New Zealand confirmed that talks with India would begin soon.

Additional reporting by Tobias Buck in Jerusalem

 source: Financial Times