Globes | October 10, 2010
Israel and India move toward free trade pact
Negotiations on a financial protocol to promote trade between the two countries will begin in November.
10 October 10 14:59, Ron Dagoni and Eran Peer, Washington
Economic relations between Israel and India are set for a significant upgrade in the coming months. Minister of Finance Yuval Steinitz met with his Indian counterpart Pranab Mukherjee in Washington DC on Friday, and the two men agreed to prepare the ground for a free trade agreement (FTA) between their two countries.
Steinitz and Mukherjee agreed that talks on the signing of a financial protocol to promote trade between the two countries will begin in November. They also agreed that a large Israeli economic delegation, led by Steinitz and including the heads of many of Israel’s largest companies, will visit India in early 2011.
In February India’s Minister of State for Trade Jyotiraditya Madhavrao Scindia informed his Israeli counterpart Minister of Industry, Trade and Labor Binyamin Ben-Eliezer that Indian Prime Minister Manmohan Singh accepted Israel’s proposal for a free trade zone between the two economies.
Steinitz is in the US capital for the semi-annual meeting of the IMF and World Bank and is meeting with senior economic figures in the Obama administration as well as many foreign Ministers of Finance.
Steinitz said, "Israel cannot rely just on the markets in the US and Europe. We need new markets. We must look eastwards especially to India and China. I am interested in a closer connection between India and Israel, similar to the economic ties we have with the US and Europe."
Steinitz added, "I want to see Indian investments in Israel, just as there are investments by Israeli companies in India. There is a special close chemistry between Indians and Israelis. This closeness can take advantage of the special abilities of the US Jewish community for the benefit of Indian interests.
Steinitz did not say so but taking advantage of the special abilities of the US Jewish community was also one of the important aspects of strategic ties between Israel and Turkey.
Steinitz dismissed suggestions the possibility that an FTA with India would lead to jobs moving away from Israel to India. He said, "Israel usually exports added value and not end products. We aim to achieve economic cooperation with India that is typical of our relations with the US. These relations make the ground fertile for exporting added value, such as chips, which are integrated into end products."
Steinitz has brought to maturity a long term Israeli effort to deepen economic ties with India, one of the most important markets for Israel’s defense industries and one of Israel’s main trading partners in Asia.
Trade between the two countries, including diamonds, but not including defense deals, amounted to $3 billion in 2009, down 25% from 2008. Trade without diamonds totaled $1.77 billion, down 14% from the previous year. Israeli exports to India totaled $1.21 billion in 2009, and imports totaled $558 million.