'Free trade pact will give Israel access to Arab markets'

India will become a hub for Israeli exports to the Middle East once a free trade agreement is signed between the two countries, the CEO of the Ramat Gan branch of the State Bank of India said Wednesday.

Speaking at a seminar on Israeli- Indian trade at Tel Aviv University, A. Purushothoman said India provided Israel with a gateway not only to Arab countries with which it has no direct relations, but also to large Asian markets such as Malaysia and Indonesia.

The seminar was hosted by the Israel-Asia Center, a non-profit organization dedicated to promoting cooperation between Israel and Asia, and Tel Aviv University’s Sofaer International MBA Program.

It was held as part of a series of events to mark 20 years of relations between Israel and India.

Eli Belotsercovsky, director of economic relations with India at the Israeli Foreign Ministry, said the two countries were aiming to complete free trade negotiations by the end of this year, although he stressed that this “won’t be easy,” as there were many issues to be resolved.

Bilateral trade reached $5 billion last year, but this figure will rise significantly once the FTA is signed, Belotsercovsky said.

The Indian government has prioritized the expansion of economic relations with Israel, he said, pointing out that Israel and New Zealand are the only non-regional countries with which it is has opened free-trade negotiations.

Water and agriculture are the obvious areas in which bilateral trade can be expanded, homeland security also provides untapped potential, Belotercovsky said, adding: “We have a lot of experience [in homeland security], and India has great demand,” Vani Rao, head of the commercial wing at the Indian embassy in Tel Aviv, said Israeli companies must look beyond just selling goods to India’s 1 billion-plus population, and that India could also become a manufacturing and R&D hub for Israeli companies.

The two countries create a good match, she said, because Israel is a leader in innovation, and India provides skill and high-quality manufacturing at low cost.

Anat Bernstein-Reich, president of Israel-India Friendship Association and co-founder of project management firm A&G Partners, said Israeli companies typically make two mistakes when they enter the Indian market: they misunderstand the price-sensitive nature of the Indian economy; and they do not budget properly.

Many companies try to sell their product for 10-20 percent less in India than they do in Israel, but A& G recommends they sell for 30-40% of the Israeli or American shelf price, Bernstein-Reich said.

She added that Indian labor is no longer cheap, and that Israeli companies should manufacture there because of the unlimited supply of skilled manpower, and not because it costs less to employ an engineer there than it would in Israel.