Investment Opportunities for Israeli Companies in India

The Indian Government’s ‘Make in India’ scheme is leveraging India’s natural resources and human capital to attract FDI and foreign expertise to boost the GDP growth rate in the long and short run. In a globalised world, Indian emissaries, both political and business, are networking far and wide to establish and streamline business entities as India looks to enhance its manufacturing and service sectors. The country is looking for more business opportunities in the Middle East as it looks to expand its global footprint and influence, as well as tightening its trade deficit.

One such opportunity lies in broadening trade ties with Israel. In matters of defence, India purchased around $5 billion worth of defence equipment from Israel between 2002 and 2007, which has now grown to around $10 billion over the past decade. Israel is India’s fifth largest source of defence spending, and, with removal of the 49% FDI rule being inculcated in defence, there is a huge opportunity for cooperation between Indian and Israeli defence suppliers. Not only will the removal of the 49% FDI cap on defence investment attract more Israeli investments, indigenous procurement of defence supplies may also open other avenues for Israeli investors, thus deepening overall investment ties.

Not only in defence, Israel and India are cooperating on a host of other issues such as agriculture, space collaboration, ICT and tourism. Around 40,000 Indians visited Israel annually with around 50,000 Israeli tourists visit India. India is a top tourist destination for Israelis, especially Israeli youth. Both India and Israel suffer from uncertainty in climactic conditions for agriculture, and there is immense need for cooperation, with water management, horticulture management and drip irrigation techniques. ISA (Israel Space Agency) has been a client of India’s ISRO; in fact, ISRO’s trusty PSLV (Polar Satellite Launch Vehicle) has launched satellites before for ISA. Further collaboration in space technologies will open up several avenues including telecommunications, radar technology, etc. which can attract Israeli investments.

While there is a plethora of potential trade engagements in the pipeline, both sides agree that trade ties are not quite as significant currently as they would like. Bilateral trade, as of 2015, is still relatively narrow. Apart from defence spending, Israel exports to India equalled around $2 billion and India’s exports to Israel totalled around $2.3 billion. The bulk of Israeli exports to India were gemstones and precious metals (totalling nearly half of Israeli exports, by value), organic chemicals, electronics and medical equipment and plastics. India on the other hand also featured gems and precious metals, electronic and medical equipment, iron and steel products and fertilizers. While bilateral trade has grown significantly over the past decade, from around $2.5 billion in 2005 to nearly $4.5 billion in 2015, there is no reason why ties cannot keep growing at a faster pace.

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