This report examines the enormous potential for business development that’s exists between Israel and India today. It looks at the history of Israel-India business relations, key agreements made between the two countries that ease the way for further business collaboration and reports on Indian Prime minister, Modi’s, recent visit to Israel.
The report also outlines some of the main industries in which business is already burgeoning between the two countries and how Israel is uniquely placed to offer India solutions to some of the many problems it faces as a rapidly growing and modernising nation. It also outlines where future opportunities for Israeli business to expand into India exist.
Further Information as well as details about current business opportunities and future events can be found on Israel Ministry of Economy and Industry website, special section on India – http://itrade.gov.il/india/
India is emerging as an exciting marketplace for Israeli companies in a large range of fields. This report covers some of the key sectors that are already establishing a presence in India. However, the doors are open for further and wider collaborations between the two countries and there is a world of exciting opportunity opening up that Israeli businesses should not ignore.
A historic visit
Following the historic three-day visit of Indian Prime Minister Modi to Israel on July 4th, the time has become ripe for Israeli companies to launch business ventures and forge ties within the rapidly expanding Indian market. Modi’s visit marks the first to Israel by an Indian head of government and is a celebration of the 25-year anniversary of the establishment of diplomatic ties between the two countries.
A perfect fit
According to Ambassador Daniel Carmon, India and Israel are “natural partners, both ancient peoples with vibrant democracies, proud of their history and heritage and eager to grasp the future.” The two economies, though different in size, scale and scope, are an excellent match. Israel’s technological solutions and fruitful Start-Up scene can find partners in India to help take Israeli innovation to the next level.
India shares many of the challenges Israel has faced over the years. The expertise and technology Israel has developed in tackling water shortages, improving crops through R&D, building a superior defense organization, developing medical advancements, communications systems and the Internet are of huge value to India as one of the largest and most rapidly developing countries in the modern era.
India has already adopted many Israeli solutions, adapting them to their own challenges, and this sharing of knowledge and resources is expected to grow.
A world of opportunity
In 2010 India proposed a Free Trade Agreement with Israel. Trade between Israel and India has climbed 2000% since the countries formalized relations, with expenditure rising from US$ 200 million in 1992 to $4.167 billion in 2016. Israel’s exports to India have risen a total of approximately 60% in the past decade. India is now Israel’s second-largest trading partner in Asia, second only to China. Moreover, India currently ranks ninth amongst Israel’s export destinations.
The Israel Economy Minister, Eli Cohen, points out “There is an opportunity here at a time when the Indian economy is becoming a prime target market with more than 1.3 billion consumers, of which about 300 million residents belong to the middle- and upper-middle class and have purchasing power that is no less than that of the middle class in Western economies.”
In recent years, Israel has been actively trying to strengthen economic relations with India. In 2011, Israel announced a fund of NIS 100 million spread over a period of three years to cover expenses on relocation of employees to India (or China); hiring local consultants; and logistics for opening an office in the target country (source: Israel Ministry of Economy and Industry India report)
From the Indian side, relations are warming, with Modi’s government actively working to improve the efficiency of bureaucracy in India, while removing barriers to the activity of international companies, including Israeli companies.
To date, collaborative activity has grown between the two countries in a variety of sectors. This includes agriculture, science, health, IT, telecommunications and industry. Both parties are eager to further partnership ventures in areas such as water technologies and smart cities.
Indian delegation to Israel
Modi was accompanied on his recent visit by a business delegation of over 100 entrepreneurs who will take part in founding a joint forum for CEOs from both countries. Members of the delegation, alongside Israeli innovators and investors, will promote new business partnerships and expand existing collaborative activity.
Among the delegates were 15 senior executives of the following Indian companies:
- Wipro – An information technology company involved in cognitive computing, hyper-automation, robotics, cloud, analytics and emerging technologies.
- Reliance – A leading GSM (Mobile Communications) service provider.
- Adani ‒ An Indian multinational conglomerate with diversified businesses in the resources, logistics, agribusiness and energy sectors.
- Tata Group ‒ A global enterprise headquartered in India which comprises over 100 operating companies in diverse areas such as communications, defense and aerospace, financial services, manufacturing and retail. They have operations in more than 100 countries worldwide.
- Jain Irrigation Systems – A micro- irrigation systems company with turnover in excess of 1 billion dollars.
- Infosys – A global leader in technology service and consulting.
- Mahindra – A US$ 19 billion global federation of companies including automobile manufacture and IT solutions
Israeli companies currently active in India
A variety of Israeli companies have already established representative offices or manufacturing plants in India as well. These offices and plants are expected to increase over the coming years. Companies currently operating in India are:
- Teva (pharmaceuticals)
- Netafim (micro-irrigation)
- Check Point (cyber security)
- Amdocs (software)
- Magic Software (enterprise mobility, cloud applications and business integration)
- Ness Technologies (IT services)
- Israel Aerospace Industries (military and commercial aerospace industries)
- Elbit Systems (defense)
- Verint (communications and interception solutions)
- Mobileye (vision-based advanced driver-assistance systems)
- HP Indigo (digital printing solutions)
Seven agreements signed
During Modi’s ground-breaking visit, seven agreements were signed between India and Israel. The agreements (listed below) involve cooperation in key sectors such as space, agriculture and water conservation. In the water sector, two agreements were signed to increase cooperation on water conservation and State water utility reform in India. (Source: Israel Ministry of Economy and Industry India report)
- A Memorandum of Understanding (MoU) was signed between India’s Department of Science and Technology and Israel’s National Technological Innovation Authority for the setting up of USD 40 million in the India-Israel Industrial Research and Development (R&D) and Technical Innovation Fund.
- India’s Ministry of Drinking Water and Sanitation, and Israel’s Ministry of National Infrastructure, Energy and Water Resources signed an agreement for the National Campaign for Water Conservation in India.
- India’s Uttar Pradesh Jal Nigam and the Ministry of National Infrastructure, Energy and Water Resources signed an agreement on State Water Utility Reform in India.
- In the agriculture sector, the two countries have agreed upon an India-Israel Development Cooperation – a three-year work programme in agriculture from 2018 to 2020.
- Agreement for cooperation between the Indian Space Research Organisation (ISRO) and the Israel Space Agency (ISA) regarding cooperation in Atomic Clocks.
- An MoU was signed between the Indian Space Research Organisation (ISRO) and the Israel Securities Authority (ISA) for cooperation in the GEO-LEO optical link.
- An MoU was signed in Electric Propulsion for small satellites.
Key growth areas
The time has never been better to develop business interests between Israel and India. Huge opportunity exists, especially in the areas of agriculture, medical innovation, water, investment, energy, telecommunications, life sciences, finance and homeland security. Following is an outline of some of the key collaborations between Israel and India to date, organised by sector.
- India and Israel have a bilateral agreement for cooperation in agriculture.
- Under the bilateral Action Plan for 2012-2015, agriculture cooperation has been expanded to seven Indian states
- More than ten India-Israel Centres of Excellence for cooperation in agriculture have been established to date.
- India has benefited from Israeli expertise and technologies in horticulture mechanization, protected cultivation, orchard and canopy management, nursery management, micro- irrigation and post-harvest management.
- Israeli drip irrigation technologies and products are widely used in India.
- Some Israeli companies and experts are providing expertise to manage and improve dairy farming in India through their expertise in high milk production of milk animals in hot climatic conditions and genetic engineering.
The chronic tensions with Pakistan over borders have fostered defense cooperation with Israel. The Indians are fond of pointing out that between Bangladesh and Marrakesh, India and Israel are the only two non-Muslim states and two democracies (Source: Ha’aretz). The Stockholm International Peace Research Institute says that India has emerged as the world’s largest arms importer, accounting for 13% of the world total in 2012-16, compared with just 8% for No. 2 Saudi Arabia.
The arms trade between Israel and India is growing, with Modi moving ahead on his US$ 250 billion program to modernize the country’s aging military equipment. India imports critical defense technologies from Israel and there are regular exchanges between the two armed forces.
In the biggest security contract ever for Israel’s defense industry, Israel Aerospace Industries (IAI) has sold advanced medium-range surface-to-air missile systems to the Indian army in a deal worth US$ 2 billion which includes Rafael as a subcontractor. IAI said it would also supply additional long-range air and missile defense systems for the first locally produced Indian aircraft carrier.
“The current contracts represent an enormous expression of confidence by the government of India in IAI’s capabilities and advanced technologies, which are being developed with our local partners as part of the Indian government’s ‘Made in India’ policy,” IAI CEO Joseph Weiss said.
Science & Technology
India-Israel cooperation in Science & Technology is evolving rapidly. Under a Memorandum of Understanding on the Industrial Research and Development Initiative signed in 2005, a joint industrial R&D fund i4RD has been set up to promote bilateral industrial R&D. Under i4RD mechanisms, joint projects by the industry are funded, involving at least one Indian and one Israeli company.
Since the launch of this program, seven projects have been approved. For example, Tata Industries India and Ramot, Tel Aviv University (the University’s technology transfer company) have entered into a Memorandum of Understanding to fund and generate commercialization-ready technologies in a wide range of fields, including engineering, exact sciences, environment and clean technology, pharmaceuticals and healthcare. Under the Memorandum of Understanding, Tata Industries will be the lead investor in Ramot’s US$ 20 million Technology Innovation Momentum Fund. There is a regular exchange of high-level visits from both sides to enhance bilateral economic and commercial ties.
The Indian medical device sector is worth approximately US$ 5.5 billion and is expected to grow at 15%. The medical device market is dominated by imported products, which comprise approximately 75% of total sales. The domestic companies are largely involved in manufacturing low-end products for local and international consumption. Lately, many multinational companies have established a local presence by acquiring established domestic companies or starting a new business (source: Israel Ministry of Economy and India special report on India)
The overall Indian healthcare market is worth approximately US$ 100 billion and is expected to grow to US$ 280 billion by 2020. The Healthcare Information Technology (IT) market, which is currently valued at US$ 1 billion, is expected to grow 1.5 times by 2020. There is a significant scope for enhancing healthcare services, considering that healthcare spending as a percentage of Gross Domestic Product (GDP) is rising (source: Israel Ministry of Economy and India special report on India)
Rural India, which accounts for over 70 per cent of the population, is set to emerge as a potential demand source. India is a land full of opportunities for players in the medical devices industry.
At the 4th MEDinISRAEL Conference and Exhibition held in Tel Aviv in March 2017 (one of the more important Medical Devices and HealthCare IT events for business and healthcare professionals from around the globe), over 45 registered delegates were from India. These included some of the biggest players on the Indian Healthcare scene such as Apex Medical Systems, Adroa Healthcare, Genetix Biotec Asia, Kansons India, Wearable Technologies (Kolkata), Vishal Surgical Equipment and Amrita Institute of Medical Sciences.
The event was successful in showcasing over 120 Israeli companies offering exciting technologies such as wearable devices and mApps, artificial intelligence, on-site diagnostic tools, virtual and augmented reality for training, treatment & rehabilitation, technologies to drive hospital efficiency and the power of multi-disciplinary advanced manufacturing solutions.
There is currently a huge scope for Israeli medical technology companies to expand into the Indian Market.
Israel is known worldwide for its strengths in water and agricultural technology. For years, Israel has been providing India with world-leading expertise and technology to help them combat these issues.
In return for capitalizing on Israel’s technological expertise, India provides Israel with a huge market opportunity and endless avenues for business investment. With the second largest population in the world, and a GDP of around US$ 2 trillion (according to the World Bank), the Indian market offers the kind of scale that Israeli businesses need.
Over the 25 years of diplomatic relations, the shared initiatives have been wide-ranging. Since 2008, the nations have strengthened their relationship through the joint establishment of “Centre’s of Excellence” in India, as part of the Indo-Israel Agricultural Cooperation Project. Present across nine Indian states, the 26 centres provide Israeli technology and expertise to Indian farmers.
One of the leading Israeli start-ups making waves in India is Aqwise which has built a water treatment plant that supplies drinking water to the city of Agra. The company provides approximately 2 million inhabitants and tourists with clean, potable water.
Israel’s Netafim implements drip irrigation technologies that help Indian farmers conserve precious water.
WaterGen, an Israeli air-to-water technology company, is a global leader in water purification. By extracting moisture from air, WaterGen is able to generate water that is safe to drink. Earlier this year, they signed a memorandum of understanding with the India solar engineering firm, Vikram Solar. The deal, which is estimated to be worth at least US$ 100 million, will help the company expand in the Indian market. (Source: No Camels Israel Innovation News)
Wix – which provides tools to build and operate websites – announced their results for Q1,2017. Revenue grew 50% to $92.5M, with a total 103 million registered users, of which 2.7 million are paying customers. As a veteran of Israeli high-tech scene, Wix makes me proud – headquartered in Tel Aviv, 1,284 employees around the globe and a market cap north of $3BN. No quick exit, no fire sale, no technology transfer, just “long term, slow burn, getting it done”. Rock on!
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