Israel - India Economic Review

Economic Background:

• 2010-Indian economy rebounded from the global financial crisis - in large because of strong domestic demand.
• 2011-Economic growth slowed due to persistently high inflation and interest rates and little progress on economic reforms.
• High international crude prices exacerbated government's fuel subsidy expenditures contributing to a higher fiscal deficit.
• Little economic reform in 2011, due to corruption scandals
• Medium-term growth outlook is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy.
• Long-term challenges not yet fully addressed: poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, scarce access to quality education, and accommodating rural-to-urban migration.   

Main industries: 

Textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, pharmaceuticals.   

Economic profile: 

GDP: $4.463 trillion (2011 est.) 

GDP per capita: $3,700 (2011 est.) 

GDP growth rate: 7.8% (2011 est.): 

Agriculture: 18.1%, Industry: 26.3%, Services: 55.6% (2011 est.) 

Inflation: 6.8% (2011 est.) 

Unemployment: 9.8% (2011 est.) 

Exports: $298.2 billion (2011 est.) 

Imports: $451 billion (2011 est.)   

Export-commodities: petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel

Export-partners: US, UAE, China, Hong Kong  

Import-commodities: crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals 

Import-partners: China 12.4%, UAE 6.5%, Saudi Arabia 5.8%, US 5.7%, Australia

Israel – India

Israeli investments in India: 

Israeli investments in India started in early 90's. In 2008, about a 1,000 Israeli companies operated in India. Main sectors: agriculture, technology, software, communication, real estate, renewable energy.   

Israel - India Relations:

Bilateral trade and economic relations have progressed rapidly since the establishment of diplomatic relations between India and Israel in 1992. From a base of US$ 200 million in 1992 (comprising primarily of diamonds), merchandise trade has diversified and had increased sharply reaching US$ 4747.1 million in 2010. 

India-Israel two-way trade during Jan-May 2011 reached US$ 2152 million. In 2010, India stood at the sixth place in terms of Israel's trade partner countries (third largest trade partner in Asia after China and Hong Kong). 

Major exports from India to Israel include precious stones and metals, chemical products, textile and textile articles, plants and vegetable products, mineral products, rubber and plastic products, base metals and machinery. Major exports from Israel to India include precious stones and metals, chemical and mineral products, base metals, machinery, and transport equipment. 

There is a growing interest from Israeli companies in clean energy, water technologies, biotech, nanotech, homeland security, real estate, infrastructure and financial services. There is also an increase in mutual investments, joint ventures and collaboration in R&D. 

Bilateral trade (million $, excl diamonds):   

Main export commodity groups from Israel to India in 2011: 

(million $) 

-Pearls, precious stones, metals & articles, 

  thereof, imitation jewellery and coins -                                             1557.0 

-Products of the chemical or allied ind. -                                              598.7 

-Machinery, electrical equipment, image 

  and sound recorders, and their parts -                                               466.1 

-Optical, photographic, measuring, 

  checking and  medical instruments -                                                  149.9 

Main import commodity groups from India to Israel in 2011: 

(million $)   

-Pearls, precious stones, metals & articles, 

  thereof, imitation jewellery and coins -                                               1361.4            

-Products of the chemical or allied ind. -                                                278.4 

-Vehicles, aircraft, vessels and 

  associated transport equipment -                                                          118.8 

-Plastics, rubber and articles thereof -                                                    101.3 
 

Bilateral agreements: 

With the Mercosur, Nepal, Finland, Korea, Pakistan, SAFTA, APTA, trade & investment agreement with the EU.   

Agreements with Israel: 

Agreement for the Promotion and Protection of Investments, Convention for the Avoidance of Double Taxation, Bilateral Agreement regarding Mutual Assistance and Cooperation in Customs matters, Agreement on Cooperation in Peace Uses of Outer Space, Agreement on Cooperation in the field of Health and Medicine, MOU on India-Israeli Research and Development Fund Initiative, Inter Governmental Work Plan on Agriculture Cooperation, FTA under negotiation.  

*This article contains general information only.