NEW DELHI :
Fear of intellectual property (IP) theft and difficulty in securing work visas are among top concerns holding up Israeli investment in India, said Anat Bernstein-Reich, chairperson of the Israel-India Chamber of Commerce.
India and Israel are expected to sign a comprehensive free trade pact in June, nearly a decade after the two countries began talks in this respect. Describing the bilateral ties as a ‘strategic’ one, Bernstein-Reich said merchandise trade between the two countries, currently at $5 billion will grow threefold in the next decade once the FTA is signed. Bernstein-Reich indicated that Israel will open its doors for Indian professionals in the software and high-tech sectors, and build manufacturing and assembly units in India to boost trade. Israel is also looking to grow its shipments of electronic parts that find use in booming sectors such as electric vehicles (EVs), agritech, medical devices and defence. Edited excerpts:
How significant is the India-Israel FTA amid the ongoing geo-political tensions and major supply chain disruptions globally?
There has been no real growth in trade between the two countries in the past 5-7 years. This is something that needs to be changed and the FTA will help do it. India and Israel plan to sign the comprehensive FTA sometime in June. We have been waiting for this for nearly 10 years. So, the present bilateral trade is about $5 billion, excluding defence. The plan is for the trade to triple within the next 10 years.
What held the FTA discussions were…in a sense that Israel wanted lower customs duty and India wanted its manpower to be able to work in Israel. I think gradually Israel understood that there is a need for professionals such as caregivers, software engineers and people for our high-tech industry. The high-tech industry is suffering from a lack of professionals and salaries are rising too fast. This is where India could play a role. India can train and bring professionals to our high-tech industry.
What are the bottlenecks Israeli companies are facing while doing business with India or Indian firms?
I don’t see any bottlenecks from the government’s perspective. From a regulation point of view, coming to India is no longer a challenge but IP protection is still a challenge.
And a few Israeli firms are still struggling with IP protection in India. There is a company which has been fighting in court for the past few years as a local company stole its technology. This is bad because they go back and share their experience with the companies in Israel.
India should be stricter about IP enforcement. The legal system is still not a safe place for international players. If you want to have a healthy business environment, you have to have a healthy legal system. You need to have trust which is lacking currently.
Employment visa is still given very sparingly. If I have an investment in India, I want to be able to stay there or assign someone to protect my interest. So, this is another thing that needs to be addressed.
You mentioned trade between India and Israel could rise threefold after the FTA. Which are the sectors that could drive this growth?
Many of the things in the electronic space will eventually be assembled in India, so electronic components will be made here in India. Israeli companies understand that they have to assemble in India to use the arbitrage of manpower price. So, components will be shipped and very few finished goods will be shipped to India.
It is better to assemble it in India or take a few components and make it in India.
Growth could also take place in segments such as agritech, medical devices, components used in water treatment supply chain, defence components.
The EV sector is growing in India as well as Israel. So, we’re creating a lot of devices for EVs. Such components would be shipped to India. Another sector that could boom in trade is the energy sector and energy storage.
The FTA was on hold for decades; so, what were the hurdles and what has changed?
I think that there was a time that we almost reached an agreement and then the Indian government stopped all its FTA discussions around seven years back. It was just after PM Modi got into power. We had expected an FTA after he came to power because Modi is a good friend of Israel since his Gujarat days.
Our relation is more on a strategic level. We have the same challenges and a strong collaboration in defence. During covid-19, we supported each other. India provided medical ingredients and Israel provided knowledge on covid-19 management. So, our relationship is beyond FTA.