2

A

GLOBAL / COUNTRY STUDY AND REPORT

ON

“ISRAEL”

Submitted to

Gujarat Technological University

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF

MASTER OF BUSINESS ASMINISTRATION

UNDER THE GUIDANCE OF

Faculty of CPIMR

Submitted by

Section B [Batch: 2010-12]

MBA SEMESTER III/IV

SHRI CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH MBA PROGRAMME (768)

Affiliated to Gujarat Technological University, Ahmedabad

April-May, 2012

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PREFACE

The Global Country Study and Report on “ISRAEL” is an atempt to study various aspects of

this selected country and Industrial scenario existing in the country. Thi report is a part of

comprehensice study done by MBA students to explore Export-import opprtunites with

respect to varios industries selsected by them.

Due to increased integration and globlaisation of world economies, business activities acrse

the globe has increased. Students have been able to acquire the knowledge of the Global /

Country Markets, which would help them do business or manage investments successfully

across national boundaries.

This report also serves a purpose of knowledge resource on one country and helps many

researchers, academicians, industry persons to draw conclusion on global trade and

commerce.

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Report Entire Israel country

MBA Semester III - IV (Section B students) work

Contents

Particulars pg. no.

Part I – Economic Overview of Selected Country

Major Economic sectors of Israel 2 Overview of business and trade at international level 3 Demographic profile of Israel 5 Overview Of Industries Trade And Commerce 7 Technological, Environmental and Legal Analysis of Israel 10 Political, Economic and Social Analysis of Israel 12 Overview of Economy of Israel 13 Present Trade Relations Of Different Products With India 16

Part II – Industry Study (Ten industries) (Introduction of Selected Industry, Structure, Functions and Business activities, comparative position of selected Industries, Present position and trend of Business with India or Gujarat, Policies and norms of selected country and India for selected industry for export Import, Present Trade barriers, Potential for export / import and Business opportunities in future, Conclusions and Suggestions)

A Study of High-Tech Industry 21 A study of Agriculture Industry 33 A study of Transportation and Communication Industry 43

A study of Textile Industry 57

A study of Pharmaceutical Industry 72

A study of Agro-Technology Industry 86

A study of Defence Industry 105

A study of Diamond Industry 114

A study of Plastic and Petroleum Industry 125

A study of Tourism Industry 136

Conclusions 152

References 153

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6

Part I

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ECONOMIC SECTORS OF ISRAEL1

A strong position on the eve of the crisis: Israel was well prepared when, in 2008, the

effects of the financial crisis began to ripple across world economies. Israel was a sought-

after target of foreign investment and was enjoying a positive trade balance for the first time

in its history. The crisis could have spelled an end to these halcyon days, but Israel’s growth

proved to be robust enough to withstand the consequences of the financial downturn of 2008.

Industry Hi-Tech Industries

Diamond Industry Agriculture

Construction Transport and Communication

Tourism Industry

Israel is most industrialized country. Until the 1970s, traditional industries - such as food

processing, textiles and fashion, furniture, fertilizers, pesticides, pharmaceuticals, chemicals,

rubber, plastic, and metal products provided most of the country's industrial output. Opening

development centres of multinational companies such as Intel, Microsoft, IBM, and others.

Hi-Tech Industries: Only 37 percent of the industrial product in 1965, a rate that grew to 58

percent in 1985 and around 70 percent in 2006. Israel has agreements for joint funding of

R&D projects with the US, Canada, Italy, Belgium, Austria, France, Sweden, Germany,

Holland, Ireland, Portugal, Spain, Hong Kong, India, Turkey and China.

Hi-tech exports: 3 billion in 1991 to $12.3 billion in 2000. $29 billion in 2006. In 2009, the

product of ICT (information and communications technology, a major part of hi-tech

industry) amounted to $19 billion.

Diamond Industry: The Israeli diamond industry is a world leader in both cutting-edge

technologies and craftsmanship. Main reason for leading world diamond manufacturing and

trading center is that the Israeli diamond industry is as multi-faceted as its diamonds.

Agriculture: Israeli farmers and scientists have had to contend with a difficult environment

and limited water resources.The close cooperation between R&D and industry led to the

development of a market-oriented agri-business that exports agro-technology solutions –

particularly water solutions – worldwide.

1 Daniel Maman and Zeev Rosenhek, The Israeli Central Bank: Political Economy: Global Logics & Local Actors, Routledge, 2011.

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Construction: Israeli companies are among the world leaders in the design and manufacture

of building metal structures, prefabricated parts and components – such as doors, windows,

sanitary equipment, plumbing components, fixtures and accessories, and more.

Transport and Communication: It is a service rather than a production sector, and is

growing - as is the case in all modern economies - faster than the production industries.

Today, the number of buses more than tripled, and the number of trucks increased tenfold.

Tourism: Tourists are attracted by Israel's geographical diversity, its archaeological and

religious sites. The almost unlimited sunshine and modern resort facilities on the

Mediterranean, Lake Kinneret (Sea of Galilee), the Red Sea, and the Dead Sea.

Conclusion:

• The economic sectors of Israel include Industry Hi-Tech Industries Diamond Industry, Agriculture, Construction, Transport and Communication Tourism.

• With a population in 2010 of more than 7.5 million, in particular Israel has been internationally acclaimed in agriculture and agro technology, irrigation, solar energy, and in many hi-tech industries and start-ups.

• In 1950 exports financed only 14 percent of imports, in 1960 this ratio was 51 percent, and in 1996 it stood at 79 percent. Since then the actual deficit began declining, down to $4.7 billion in 2001 and to a mere $0.7 billion in 2005, representing less than one percent of total trade.

• During last decade the external debt was $50 billion in 2010 which was good for Israel.

• Overall we can say that economy of Israel has been witnessing a growing phase.

Overview of Business & Trade of Israel at International Level

2The economy of Israel is a technologically advanced market economy, including a rapidly-

developing high-tech and service sectors. As of 2010, Israel has the 24th largest economy in

the world, and ranks 15th among 169 world nations on the UN's Human Development Index,

which places it in the category of "Very Highly Developed". The major industrial sectors

include metal products, electronic and biomedical equipment, processed foods, chemicals,

and transport equipment. Israel diamond industry is one of the world's centers for diamond

cutting and polishing. Israel has a diversified and technologically advanced economy. The

• 2 Retrived from www.israelimporter.com

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agricultural sector employs 2% of the population and the country's main crops are fruits and

vegetables, cereals, wine and cattle farming. The country is self-sufficient in food

production, with the exception of cereals. Israel is the country which invests the most in

research and development (4.8% of the GDP) in the world. The country has a highly qualified

manpower, particularly in engineering. The country is ranked 2nd place in world, with regard

to availability of venture capital. The government provides the necessary support to

entrepreneurs.

In Israel Corporate tax is relatively high. The State of Israel has a significant public debt. Manpower

costs are higher than Asian or East European countries. Lastly, Israel suffers from great geopolitical

instability due to the political environment of the region. The investment system in Israel is liberal and

most of the activities are open to private national and foreign investors. According to a report of the

Bank of Israel, the flow of foreign direct investment (FDI) into Israel totaled USD 3.7 billion in 2009,

which means a decrease of more than 50% compared to 2007, and they have remained weak in 2010.

Foreign investment incentives, to encourage investment in Israel, are given through the recently

revised law. The new law differs from the first one by the addition of a financial incentives plan.

The Israeli economy is extremely open. Israel's exports represent around 24% of the GNP.

They are the backbone of the country's growth.

The main customers and suppliers of Israel are the European Union, the United States,

Turkey, Japan, India and China. The main goods imported by the Israeli state are raw

materials and half-finished products, hydrocarbons, consumption goods (food products and

drinks, electrical equipment, transport equipment, etc.) and investment products. The main

national exports are manufactured goods which are often high technology products (computer

equipment, electronic components, aeronautics, electronic communication equipment,

verification products and pharmaceutical products). A 1996 Agreement on Trade in

Agricultural Products (ATAP) with the United States permits Israel to maintain non-tariff

protection for certain agricultural products. The Bank of Israel authorizes advance payment

of up to 35% or $200,000, whichever is lower. The $200,000 limitation is not applicable for

the importation of equipment. Payment schedules vary. For raw materials, components and

semi-finished goods, credit is usually limited to 60 days. For equipment and machinery,

extended schedules may range from six months to two years.

The Canada–Israel Free Trade Agreement (CIFTA) is a free trade agreement between

Canada and Israel. It was signed on July 31, 1996, and came into effect on January 1, 1997.

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The United States-Israel Free Trade Agreement is a trade pact between the State of Israel

and the United States of America established in 1985 that lowers some barriers to trade in

some goods.

Foreign trade statistics include Personal import and export, Ships and aircraft, Equipment imported or

exported on a lease basis, Gold and silver (non-monetary). Special transactions and commodities not

included the transactions with the residents of the Palestinian Authority, Commodities imported or

exported for a limited period of time, Effects purchased by tourists in Israel or by Israelis abroad,

Engines and parts of aircraft sent by local airlines to their branches, Fish caught by Israeli fishing

vessels, Fuel and food supplied to Israeli ships and aircraft in foreign ports, Imported military

equipment and weapons.

DEMOGRAPHIC PROFILE OF ISRAEL3

The State of Israel has a population of approximately 7,798,600 inhabitants as of September

2011. In which 75.3% of them are Jewish (about 5,865,300 individuals), 20.5% are Arabs

(About 1,597,300 individuals), while the remaining 4.3% (about 318,200 individuals) are

defined as "others" (family members of Jewish immigrants who are not registered at the

Interior Ministry as Jews, non-Arab Christians, non-Arab Muslims and residents who do not

have a religious classification).

The PNA assumed full responsibility for the health sector in the West Bank and Gaza Strip in

December 1994. Since then, health policy planning, implementation and evaluation have

been addressed by the Palestinian Ministry of Health. The PSRAs consist of two geographical

entities - the West Bank and Gaza Strip - with an estimated population of 2.27 million. About

1.3 million live in the West Bank, and the remainder in the Gaza Strip. Approximately 30%

of the population of the West Bank lives in 12 areas, 60% in over 500 villages and around

10% in 19 refugee camps. In the Gaza Strip, approximately 52% of the population lives in the

five main urban centers, and the remaining 48% in eight refugee camps.

In Ethnic and religious groups there includes Arabs, Bedouins, Druze, Maronites, African

Hebrew Israelites, African Refugees, Assyrians, Circassians, Gypsies, Samaritans,

Vietnamese. In the past several decades, emigration has seen a considerable increase. From

3 Report on Demographic profile of Israel retrieved from

http://www.indexmundi.com/israel/demographics_profile.html

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1990 to 2005, 230,000 Israelis left the country; a large proportion of these departures

included people who initially immigrated to Israel and then reversed their course (48% of all

post-1990 departures and even 60% of 2003 and 2004 departures were former immigrants to

Israel). 8% of Jewish immigrants in the post-1990 period left Israel, while 15% of non-Jewish

immigrants did. In 2005 alone, 21,500 Israelis left the country and had not yet returned at the

end of 2006; among them 73% were Jews, 5% Arabs, and 22% "Others" (mostly non-Jewish

immigrants, with Jewish ancestry, from USSR). At the same time, 10,500 Israelis came back

to Israel after over one year abroad; 84% were Jews, 9% others, and 7% Arabs.

As stated above, the Palestinian population is about 2.27 million, with a high growth rate,

estimated at 5.2% in the Gaza Strip and 5.1% in the West Bank. The population density in the

Gaza Strip is very high, with 2,600 people per square kilometer. The population pyramid in

the West Bank shows that 45% of the population is below 15 years of age and that 3.7% are

aged 65 years or above. In the Gaza Strip, 50.3% of the population are below the age of 15

and only 2.9% are aged 60 or above.

The Israeli population is expected to surpass 10 million in the coming two decades. This

trend will increase population density severely, with all the implications that this brings in

train. The various scenarios suggest that the share of Jews and persons not classified by

religion will continue to diminish through the end of the projection period, although the

extent of the decrease will still allow their share of the population to exceed 75 percent. The

projections do, however, point to very meaningful changes in the age composition of the

population and, in particular, of the Jewish subgroups. These changes suggest that the trend

of erosion of Israel’s Jewish majority may slow.

There are various parameters like Total population, Sex ratio, Age Structure, Median Age,

Population growth rate, Density, Birth rate, Death rate, Infant mortality rate, Infant mortality

rate, Total fertility rate, Literacy.

As Israel's continued existence as a "Jewish State" relies upon maintenance of a Jewish

demographic majority, Israeli demographers, politicians and bureaucrats have treated Jewish

population growth promotion as a central question in their research and policymaking. Non-

Jewish population growth and immigration is regarded as a threat to the Jewish demographic

majority and to Israel's security. According to Jewish National Fund Board member Daniel

Orenstein, Israel is the second most-densely crowded country in the developed world. In an

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academic article, Orenstein argues that, as elsewhere, overpopulation is a stressor on the

environment in Israel; he shows that environmentalists have conspicuously failed to consider

the impact of population on the environment and argues that overpopulation in Israel has not

been appropriately addressed for ideological reasons.

OVERVIEW OF INDUSTRIES TRADE AND COMMERCE

4Israel has a technologically advanced market economy. It depends on imports of crude oil, grains, raw materials, and military equipment. The global financial crisis of 2008-09 spurred a brief recession in Israel, but the country entered the crisis with solid fundamentals - following years of prudent fiscal policy and a series of liberalizing reforms - and a resilient banking sector, and the economy has shown signs of an early recovery. The U.S. is Israel's largest single country trade partner. Since signing a Free Trade Agreement in 1985, Israel–US trade has grown eight-fold. Since 1995 nearly all trade tariffs between the U.S. and Israel have been eliminated.

2010 GDP growth was 4.5%, following growth of 0.8% in 2009. The economy grew 4.2% in 2008; 5.3% in 2007; 5.7% in 2006 and 4.9% in 2005. Israel’s GDP in 2010 was about $225 billion. Israel’s 2010 inflation rate was 2.7%. This follows five years of low inflation, including 3.9% in 2009, 3.5% in 2008, and 2.1% in 2007, slightly negative inflation in 2006, and 1.3% in 2005. Exports of U.S. goods to Israel in 2010 were $6.7 billion. In 2009, exports of U.S. goods to Israel totaled US$5.8 billion. U.S. imports from Israel in 2010 totaled $18.5 billion. U.S. imports from Israel in 2009 totaled $16.8 billion.

Introduction of Major Industries

Agricultural Industry

Israel’s agriculture is characterized by high technological level, pressure irrigation systems, automatic and controlled mechanization and high quality seeds and plants. Israel meets most of its food requirements through domestic production to produce over 5 million tons of field crops,1.15 billion liters of milk, 1.6 billion eggs and 1.2 billion flowers for export (Ministry of Agriculture, 2006). The total area of arable land is 377,300 hectares with 78% under cultivation.

Access to New Technology

From its inception, Israel has made a strong societal commitment to supporting science and technology. This has been manifested in several activities relevant to desertification.

Advanced (Subsurface) Drip Irrigation for Arid Soils

4 www.un.org/esa/agenda21/natlinfo/countr/israel/agriculture.htm

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Water management is undoubtedly the key to much of Israel's success in agriculture in arid, semiarid and dry sub-humid zones.

Financial Industry

Israel is a founding member of the EBRD, with a 0.65 per cent capital share and has a representative on the Board of Directors. The EBRD, an international financial institution investing in 29 countries from central Europe to central Asia, is owned by 61 countries, including its countries of operations, and two intergovernmental institutions. One Israeli financial institution is also participating in the EU/EBRD SME Finance Facility, with a €10 million loan to Bank Leumi’s subsidiary banking Romania. The loan is supported by€1.5 million in financial incentives and technical assistance provided by the European Union. As of January 2010,190 loans have been disbursed to small and medium-sized businesses in Romania worth €9.8 million.

Technological Industry

Israel’s high-tech industry is experiencing an unprecedented rate of growth which began in the early 1990s. Its growth is evidenced both in total sales - 1997 sales totaled $7.2 billion, a growth of 10.7% over 1996 - and in exports - $5.6 billion in 1997, a growth of 14.2% over 1996. This is in a country with a total population of less than six million; GDP (1996) of $92.3 billion; and exports (goods and services, 1996) of $31.3 billion.

The High-Tech Industry

One factor in the exceptional growth rate in this industry in recent years is Israel’s percentage of engineers; the world’s highest, with 135 engineers per 10,000 persons, as compared to 85 per 10,000 persons in the United States. Another factor has been the many thousands of skilled engineers and technicians who have emigrated from the former Soviet Union since 1989. According to the Ministry of Communications, the current telecommunications infrastructure - in a country with a population of some six million - includes:

– 2.5 million telephone lines – 1.9 million cellular users – 180,000+ Internet users – 1 million cable television users (geographical coverage 88%; in coverage area,

67% of households subscribe to cable TV) – Bezeq landline infrastructure is 100% digital – ISDN and ATM services

High-Tech Exports

Israel’s first high-tech exports were produced by defense industries such as the Israel Aircraft Industries and Rafael, as well as by defense industry sub-contractors. These firms produced electronic defense products with advanced technologies, meant for use by the IDF.

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Overview Of Industries Trade & Commerce In Israel

Israel has a technologically advanced market economy. It depends on imports of crude oil, grains, raw

materials, and military equipment. Despite limited natural resources, Israel has intensively developed

its agricultural and industrial sectors over the past 20 years. Cut diamonds, high-technology

equipment, and agricultural products (fruits and vegetables) are the leading exports. Israel usually

posts sizable trade deficits, which are covered by large transfer payments from abroad and by foreign

loans. Roughly half of the government's external debt is owed to the US, its major source of economic

and military aid. Israel's GDP, after contracting slightly in 2001 and 2002 due to the Palestinian

conflict and troubles in the high-technology sector, grew about 5% per year from 2004-07.

Tourism Industry

Israel has some important tourism sites ranging from religiously significant sites to national and

international heritage sites. Assets like Jerusalem, Tel Aviv, Eilat, Tiberis, The Dead Sea are the main

source of income for Israel. Israel had about 2.5 Mn inbound tourist in jan-sept 2010 while expected

number for whole year is 3.35 Mn with16.2 Mn overnight stays in jan-sept 2010 while the expected

stay by the end of year is 21.8 Mn.Room occupancy recorded in first nine months stood at 65% and

the annual average for the same year was 66%.The annual revenue per hotel room averaged to

$45,000 in 2008. Government expects Israel to have 5 Mn tourists per year beginning from 2015

which in turn needs Israel to have 19000 additional rooms.

Diamond Industry

For the Israeli diamond production industry, the key word at the end of 1959 was expansion. Israel’s

diamond exports rose by 37%. The number of employees increased. By the early 1960s it was already

clear to everyone that the Israeli diamond industry played a very significant part in the Israeli

economy. In contrast the recession prior to six-day war had a favorable effect on diamond industry

workforce. Though the diamond industry enjoyed 6.25% interest. For many years the supply of rough

diamonds from the CSO was limited, because of the organization’s commitment to the Belgium

diamond industry. Israeli manufacturers bought rough second-hand diamonds from suppliers in

Belgium, Holland and elsewhere. Supplies from Africa were also sent directly to Belgium and from

there, after being resorted, to Israel. The Major diamond & jewelry companies of Israel are Seren

Diamond ltd, Briza Colors Ltd, ICS Diamonds, Jacob Fogel Diamonds, Dor Diamonds (S.E. Vogel)

Ltd, Amtalai Diamonds, MW-Diamonds, ReD Diamonds.

Transportation & Communication Industry

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Rapid economic growth and the removal of the limitation on importing private cars and buses

created a growing demand for transportation services in the early 1960s. This demand was

met by increased public transportation services and by private transportation expenditures. In

1984 the subsidy on public transport equaled US$13 million. In 1985 Israel's 13,410

kilometers of roads were used by 776,000 vehicles, of which about 624,000 were private cars,

about 115,000 were trucks and other commercial vehicles, and about 5,500 were buses. Israel

also had a government-run railroad system. In 1986 there were 528 kilometers of state-owned

railroad linking Jerusalem, Tel Aviv, Haifa, and Beersheba. The government had a long-term

plan to extend the Beersheba line along the Dead Sea and south to Elat and to develop a rapid

rail line from Petah Tiqwa to Tel Aviv. Total railroad passenger traffic was 2,814,000 in

1985, and total freight carried (primarily phosphates, grains, coal, and potash) was 6,086,000

tons. As a result of Israel's geopolitical situation, almost 99 percent of its trade was

transported by ship. Thus, in the first twenty years of statehood, the government made a

special effort to build a commercial fleet. In 1985 about 9,205 tons of freight were unloaded

at Israeli ports: 55 percent at Haifa, 39.3 percent at Ashdod, and 5.7 percent at Elat. During

the same year, 7,088 tons were loaded: 22 percent in Haifa, 68.7 percent at Ashdod, and 9.3

percent at Elat. In the 1970s, two additional, specialized ports were opened: an oil terminal at

Ashqelon and a coal terminal at Hadera. These open-sea, offshore ports were operated by

special port administrations independent of the Israel Ports Authority.

Technological, Environmental and Legal Analysis of Israel

Technological Analysis

A general assessment of the science and technology (S&T) and research and development

(R&D) landscape in Israel reveals the country to be one of the world’s most prolific

innovators in advanced technologies, and a powerhouse of high-tech–based entrepreneurial

activity. In particular, during the 1990s and beyond, Israel has seen a spectacular rate of

expansion and entrepreneurship in a key sector of global growth, information and

communication technology (ICT). In recent years, Israeli researchers and entrepreneurs have

also significantly expanded their efforts beyond ICT, in part with government support, into

other high-tech sectors such as biotechnology, nanotechnology, and environmental

technologies. In addition, Israel continues to maintain its long-standing strength in cutting-

edge military technologies and niche areas of aerospace.

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The core of the Israeli cluster lies in information and communication technology (ICT),

especially cellular, data communications, electro-optics, enterprise software, hardware

design, and Internet technologies. Two other current Israeli growth areas include energy (e.g.,

electricity storage and sustainable energy development) and environment (e.g., desalination,

irrigation, wastewater, and water technology).

Environmental Analysis

Rapid technological development led to environmental degradation in Israel which made it

necessary for Israel to concentrate its efforts towards improvement and preservation of

environment. The establishment of Environmental Protection Service was the first step in the

creation of a comprehensive and modern environmental administration in Israel. Today,

Israel focuses on the two main aspects – sustainable development which means development

that meets the needs of the present without compromising the ability of future generations to

meet their own needs and for achieving this stringent new standards, accompanied by tough

enforcement, along with educational initiatives and public campaigns have been introduced

and green growth which is socio-economic growth and development that does not harm the

environment and makes efficient, economical and sustainable use of natural resources. The

Israeli government provides incentives to the firms which adopt cleaner production processes,

encourage environment- friendly technologies and develop green products and create markets

for the same. Due to the rapid increase in population and resulting diminishing pool of land

resources, the conservation of open space has become a foremost concern for Israel. Thus, a

business man may face certain location problems to set-up a manufacturing unit. There is no

legal framework regarding the amount of effluents that can be discharged in water but Israel

has in place a comprehensive water management plan. It is worth to mention that Israel is a

world leader in recycling wastewater but this does not give license to the factories to

continually degrade the water quality as the expenditure on prevention is lower than

expenditure on repair and that pollution control and waste reduction can strengthen economic

competitiveness of a firm through more efficient use of raw materials and the development of

a green image. To address the problems of air pollution, several steps have been taken like

compulsion on the catalytic converter in private vehicles, sulphur content in diesel has been

reduced, shift to alternative fuels like liquefied petroleum gas, increase in emission standards

and expansion of national air monitoring system. The legal framework for marine pollution

prevention is well established and implemented in Israel. A national centre for on-line

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surveillance of effluent outfalls to the sea is being established and thus every factory is under

constant supervision by highly skilled professional inspectors who investigate violations of

law and file legal charges. Israel is a world leader in development of drip irrigation and use of

solar energy. Though agriculture is the primary sector of Israel, the improper agricultural

practices and the excessive use of pesticides and fertilizers have been penalized. The

challenge is to cultivate high-quality produce which meets both agricultural and

environmental and health standards. Packaging law has been imposed which imposes

responsibility on producers of packages to recycle them. Thus, Israel uses regulatory,

economic, educational and cleaner production measures to help mitigate the adverse

environmental impacts of industrial development.

Legal Analysis

Israel has not formed its own legislation but has adopted the various features of legal systems and has mixed legal system of English common law, British Mandate regulations, and Jewish, Christian, and Muslim religious laws. Israel's legal system is part of Western legal culture and within that, Israel belongs Roman-German influences. The basic approach of Israel towards law is secular, liberal, and rational. The basic law of Israel is Human Dignity and Liberty and the freedom to engage in any occupation. In Israel, there is no separation of state and church and the state provides religious services for those who need it. Israel has a three-tier court system. The highest authority being vested in Supreme courts, then it is the district courts and at the lower level, it is the magistrate. Israel being one of the most technologically advanced countries, it has formed various intellectual property laws. Under its patent law, protection of products like software inventions, microbiological organisms and diagnostic methods for humans are included. Israel has no mechanism for copyright registration and the current copyright protection includes literary, dramatic, musical and artistic works.

Political, Economical and Social Analysis of Israel

POLITICAL ANALYSIS OF ISRAEL:

Establishment of the State of Israel, proclaimed by the Provisional Government and

the Provisional Council of State on May 14, 1948. Then On February 16 converted

itself into a legislative body (the first Knesset) and enacted the Transition Law,

commonly referred to as the "small constitution." Institutional arrangements

generally associated with West European parliamentary democracies, East European

and Central European institutions and traditions, and even some Middle Eastern

socio-political patterns. As of late 1988, Israel had a number of so-called "non-

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government public sector" organizations, also known as "national institutions." The

Jewish Agency Executive, for instance, was recognized by the governments of

Britain, the United States, and other states and international organizations, including

the United Nations (UN).

ECONOMIC ANALYSIS OF ISRAEL:

The high rates of growth of income and income per capita which characterized

Israel until 1973 were not achieved thereafter. GDP growth fluctuated,

generally between 2 and 5 percentage, reaching as high as 7.5 percentage, in

2000, but falling below zero in the recession years from 2001 to middle of

2003. By the end of the twentieth century income per capita reached about

$20,000, similar to many of the more developed industrialized countries.

SOCIAL ANALYSIS:

Israeli culture is heterogeneous and dynamic. With a diverse population of

immigrants from five continents and more than 100 countries, and significant

subcultures like the Palestinians, the Russians, and the Orthodox, each with its

own newspapers and cultural networks, Israeli culture is extremely varied. Tel

Aviv is considered the hub of secular culture, although many leading cultural

institutions are located in Jerusalem. The Israel Philharmonic Orchestra plays

at venues throughout the country and abroad. The Israel Broadcasting

Authority has a symphony orchestra that performs in Israel and around the

world, and almost every city has its own orchestras, many of the musicians

hailing from the former Soviet Union. Israeli dance companies, among them

the Bat-sheva and Bat-dor, are highly acclaimed in the dance world. Theater is

also an important facet of the culture of Israel. The national theater, Habima

was established in 1917. Other theater companies include the Cameri Theater,

Beit Lessin Theater, Gesher Theater (which performs in Hebrew and Russian),

Haifa Theater and Beersheba Theater.

ECONOMY OVERVIEW OF ISRAEL PART 1”

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The economy of Israel is a technologically advanced market economy, including a rapidly-

developing high-tech and service sectors. As of 2010, Israel has the 24th largest economy in the

world, and ranks 15th among 169 world nations on the UN's Human Development Index, which

places it in the category of "Very Highly Developed". Israel has a technologically advanced market

economy. It depends on imports of crude oil, grains, raw materials, and military equipment. Despite

limited natural resources, Israel has intensively developed its agricultural and industrial sectors over

the past 20 years. The Bank of Israel was ranked first among central banks for its efficient

functioning, up from the 8th place in 2009. Israel was ranked first also in its supply of skilled

manpower.

Israel Gross Domestic Product is worth 217 billion dollars or 0.35% of the world

economy, according to the World Bank. Historically, from 1960 until 2010, Israel's average Gross

Domestic Product was 58.05 billion dollars reaching an historical high of 217.33 billion dollars in

December of 2010 and a record low of 2.60 billion dollars in December of 1962. Israel has a

technologically advanced market economy with substantial, though diminishing, and government

participation.

The Gross Domestic Product (GDP) in Israel expanded 0.8 percent in the third

quarter of 2011 over the previous quarter. Historically, from 1995 until 2011, Israel's average

quarterly GDP Growth was 0.98 percent reaching an historical high of 3.70 percent in June of 1999

and a record low of -1.50 percent in September of 2001. The GDP per capita, adjusted by purchasing

power parity, in Israel was last reported at 29,800 US dollars in December of 2010, according to the

World Bank. Previously, the GDP per capita PPP in Israel standed at 28,600 US dollars in December

of 2009.

The inflation rate in Israel was last reported at 2.2 percent in December of 2011.

From 1952 until 2010, the average inflation rate in Israel was 33.14 percent reaching an historical

high of 486.23 percent in November of 1984 and a record low of -2.74 percent in March of 2004.

Inflation rate refers to a general rise in prices measured against a standard level of purchasing power.

The Adjusted net national income (annual % growth) in Israel was 2.72 in 2009, according to a World

Bank report, published in 2010. The Adjusted net national income (annual % growth) in Israel was

reported at -0.20 in 2008, according to the World Bank.

Total labor force comprises people ages 15 and older who meet the International Labour Organization

definition of the economically active population: all people who supply labor for the production of

goods and services during a specified period. It includes both the employed and the unemployed. This

entry records the cumulative total of all government borrowings less repayments that are denominated

in a country's home currency. Public debt should not be confused with external debt, which reflects

20

the foreign currency liabilities of both the private and public sector and must be financed out of

foreign exchange earnings.

The year 2009 saw a steep decrease in foreign direct investment (FDI) in Israel, with just $3.9 billion

coming in versus $10 billion in 2008, a 64% drop, according to the annual report published by the

United Nations Conference on Trade and Development (UNCTAD). The extent of FDI worldwide

stood at $1.11 trillion dollars in 2009, versus $1.77 trillion in 2008. The 64% drop in FDI in Israel is

significantly higher than the world decrease of 37%.

Israel reported a government budget deficit equivalent to 3.73 percent of the Gross Domestic Product

(GDP) in 2010. Government Budget is an itemized accounting of the payments received by

government (taxes and other fees) and the payments made by government (purchases and transfer

payments). The benchmark interest rate in Israel was last reported at 2.75 percent. In Israel, the

interest rates decisions are taken by the Bank of Israel. The official interest rate is the "headline" rate.

The Tax revenue (% of GDP) in Israel was 23.04 in 2009, according to a World Bank report,

published in 2010. The Tax revenue (% of GDP) in Israel was reported at 25.37 in 2008, according to

the World Bank.

ECONOMY OVERVIEW OF ISRAEL PART 2”

Israel has a diversified, technologically advanced economy with substantial but decreasing

government ownership and a strong high-tech sector. The major industrial sectors include high-

technology electronic and biomedical equipment, metal products, processed foods, chemicals, and

transport equipment. Israel possesses a substantial service sector and is one of the world's centers for

diamond cutting and polishing. It also is a world leader in software development and, prior to the

violence that began in September 2000, was a major tourist destination. We had taken following four

parameters to determine economic overview of Israel.

EMPLOYMENT LEVEL: It is defined as the labour force minus the number of people currently

employed. The unemployment rate is defined as the level of unemployment divided by the labour

force. The employment rate is defined as the number of people currently employed divided by the

adult population (or by the population of working age). In these statistics, self-employed people are

counted as employed. According to one online data published by tradingeconomics.com the

unemployment rate is fluctuating from January 2010 to 2011. In October 2011 the unemployment rate

is 5.6 which are decreased from January 2010.

PER CAPITA INCOME: Per capita income is a measure of prosperity. It is often used as a measure of

the wealth of the population of a nation, particularly in comparison to other nations. Israel GDP Per

21

Capita, when adjusted by purchasing power parity, stands at 27905 US dollars, according to the

World Bank. The GDP per capita is obtained by dividing the country’s gross domestic product,

adjusted by purchasing power parity, by the total population. From 1980 until 2008, Israel's GDP Per

Capita adjusted by Purchasing Power Parity averaged 16540.14 dollars, reaching an historical high of

27905.00 dollars in December of 2008 and a record low of 7171.00 dollars in December of 1980. This

page includes: Israel GDP per capita (Purchasing Power Parity PPP) chart, historical data, forecasts

and news.

THE POVERTY LINE IN ISRAEL: The poverty line in Israel is defined as half the median

disposable income, weighted by household size. A household with a disposable income that is lower

than the poverty line is considered poor. Poverty in Israel is a direct result of non-employment, the

fact that many Israelis will not or cannot work. The two largest segments of citizens outside the labor

force are Haredi men, 67% of whom study full-time, helped by government subsidy, and Arab

women, 80% of whom are at home, prevented by culture and discrimination from participating in the

workforce. A government report issued in July said that Haredi unemployment alone will cost the

Israeli economy $1.55 billion in 2010 — 300% higher than the comparable cost in 2000.

URBANIZATION: It is the physical growth of urban areas as a result of global change as more and

more people leave villages and farms to live in cities, urban growth results. In recent decades more

than 90% of the Jewish population of Israel (86.7% of the total population) is urbanized. The larger

the city, the more far-reaching tend to be the urban transformations of agricultural land. Israel is a

first-ranking agricultural export crop. Jerusalem today covers 50 times the area of the Old City. The

majority of their gainfully employed population is commuters, working in the metropolitan areas or

medium-size towns.

PRESENT TRADE RELATIONS AND BUSINESS VOLUME OF DIFFERENT PRODUCTS WITH INDIA

The Prospects for Relations between India and Israel:

The main feature of the relations between these countries is the rapid transition from

being wary of each other to becoming partners that occurred at the beginning of 1992. Some

political analysts even began calling them “friendly.” Therefore, this article focuses mainly

on the strengths of the bilateral ties between India and Israel from 1992 to early 2010 and

analyses the dynamics of Indo-Israeli diplomatic, political, military and economic relations

during that period.

India-Israel Bilateral Trade and Economic Relations:

22

Diplomatic and political cooperation: - The diplomatic and political circles began shifting

radically in 1992 in both the countries and due to those ties between India and Israel, began

and that created favourable conditions between the two countries.

Military cooperation: - A partnership was formulated in the arms market has provided a

significant impetus for improving Indo-Israeli ties. These also strengthen the relationship.

Economic cooperation: - Indo-Israeli relations are not based on economic cooperation,

although trade between the two countries has grown steadily since 1992. India became

Israel's third-largest trading partner in Asia.

Obstacles:

The major obstacles are mainly Diplomatic and political obstacles, Military Obstacles,

Economic obstacles.

The main causes of India’s anti-Israeli :-

Rejection of the partitioning of Palestine.

Anti-imperialistic worldview of India’s leaders.

India’s close ties with the Arab world.

India’s close links with the Muslim world both within the country and beyond its borders.

India-Israel Bilateral Trade and Economic Relations:

Since the establishment of relations in 1992, several agreements were signed between

Israel and India including the following:

Agreement for Promotion and Protection of Investments (Jan 1996)

Avoidance of Double Taxation and for the Prevention of Fiscal evasion with respect

to Taxes on Income and on Capital (Jan 1996)

Bilateral Agreement regarding Mutual Assistance and Cooperation in Customs

Matters (1996)

Agreement on Cooperation in Peace Uses of Outer Space (2002)

Agreement for Cooperation in the field of Protection of the Environment (2003)

23

MOU on India-Israel Research and Development Fund Initiative (2005)

Bilateral Trade and Cooperation in Major Sectors between India – Israel:

Diamond Industry, Agriculture, Pharmaceuticals, Real Estate, Information Technology, Telecommunications, Chemicals and Agro – Chemicals, Semiconductors etc

Different Products:-

There are different product to trade or import or export between India and Israel, they are given below:-

Agriculture Drip Products

Sprinklers/Micro Sprinklers

Complementary Product: Irrigation Systems

Polyethylene Pipes

Crop Management Technologies

Conclusion:

As per this reports we found that trade relation between India and Israel have been rising since 1992 in different sectors like agriculture, information technology etc. and also some Indian company expand their business in Israel.

Since the establishment of relations in 1992, several agreements were signed between Israel

and India including Mutual Assistance and Cooperation in Customs Matters, MOU on India-

Israel Research and Development Fund Initiative in 2005 make the trade between India –

Israel much easy and favourable.

24

: A Study of Hi-tech Industry:

INTRODUCTION OF HI TECH INDUSTRY & ITS ROLE IN ECONOMY

INISRAEL5

Hi-tech industries of Israel are in great demand today. Many multinational companies are in

the market of Israel whose role is more for developing the nation. The companies include

communications, computers, information systems, medicine, optics, consumer goods and

software sectors. Hi-tech industry of Israel is very advanced in technology part. The brief

about the industries are follows:

Origins :

• Israeli hi-tech firms originally began in the 1960s.

• But the industry was born with the State of Israel. In 1948, the newly-created Israel

Defense Forces established a branch called the Science Corps.

• During the same period, Israel developed the best institutions of education and

scientific research in the Middle East.

• In the early sixties, Israel entered the nuclear era with the establishment of two

nuclear research plants.

The High-Tech Industry

The Israeli high-tech industry is a high added value for the products. it manufactures and a

high rate of per employee output, more than twice the average posted by other industrial

sectors. Israel's high-tech industry today is one of the most powerful engines driving its

economy. High tech companies are located throughout the country: in central Tel Aviv, in the

order of Jerusalem, even in development towns in the Galilee and the Negev. The following

are major contributors to this growth rate:

• It has the world's highest percentage of scientists, with 135 engineers per 10,000

citizens. In comparison, the United States has 85 per 10,000.

• Advanced technologies that were developed and utilized for military purposes are

now being used for developing commercial products for civilian applications.

• Thousands of skilled personnel were forced to leave the defense industry since 1988.

The main problems facing by hi tech industries are:

1. Shortage in Electronics and Software Professionals

5 Dan Senor and Saul Singer, Start-up Nation: The Story of Israel's Economic Miracle

25

2. Achieving Market Share versus Spending R&D Budgets

3. Political and Economical Uncertainty

Israel: A Resilient Global Economy:

• With diversified, technologically advanced economy Israel has decreasing

government ownership and a strong high-tech sector.

• The major industrial sectors include high-technology electronic and biomedical

equipment, metal products, processed foods, chemicals, and transport equipment.

• Israel high-tech industry - with total sales of some $7.2 billion today - can become, in

the coming decade, a $10-15 billion industry. At 2010 Total Industrial production (i.e.

Electricity – production) growth rate is 7.8%.

Overview of Trade between Israel and India:

• Israel hit $47 billion in 2010, with India moving into second place among the Jewish

state's export markets.

• Israeli firms generally focus on developing cutting-edge software and worldwide

exports in 2010 totalled around $29 billion.

• The Israelis are focusing on the Indian state of Andhra Pradesh, home of the fast-

growing software centre at Hyderabad.

• As Israel and India both locked in conflict with Islamist terror groups- In recent years,

Israel has consolidated defence links with India into a strategic relationship.

Israel’s Business Climate :

The business climate is smooth for hi-tech industry. the climate of business is affected by

economy changes. Many major multi-nationals - Microsoft, Berkshire-Hathaway, Motorola,

Intel, HP, Siemens, GE, IBM, Philips, Lucent, AOL, Cisco, Applied Materials, IBM, J&J and

more - chosen to invest in Israel. Main Reason for investing in Israel is large concentration of

talented and innovative people , Israel yields pioneering technologies, profitable business

opportunities and high investment returns. The World Economic Forum calls Israel one of the

leading countries in the world in technological innovation.

STRUCTURE, FUNCTIONS AND BUSINESS ACTIVITIES OF THIS INDUSTRY

Israeli hi-tech have unorganized structures because there are more R&D department for

mainly hi-tech companies and all the companies had its own R&D department also. Israeli Hi

tech industries are produced Hi-tech product such as computer accessories, software product

and product that will help for R&D department.

26

Highlights from the record include the structure & functions of Hi-tech industry:

• 1st in availability of scientists and engineers.

• 2nd for venture capital.

• 3rd for quality of competition in the ISP sector.

• 4th for technological readiness and for quality of scientific research institutions.

• 5th for utility patents.

• 6th for university and industry collaboration.

• 7th for innovation and for company spending on R&D.

The Resources

• World's highest percentage of engineers and scientists.

• Greatest natural resource is its skilled workforce - highly motivated, resourceful and

independent.

Profit-driving innovations

Disk-on-Key technology, IP Telephony, Zip compression, the ingestible pill size camera,

modern drip-irrigation technology, ICQ Instant Messenger and many more were all Israeli

breakthroughs.

Business Activities:

Israeli high tech companies have moved a number of their functions—including sales,

marketing, executives, and some R&D—outside of Israel, to their key markets. Israeli

companies retain their core R&D in Israel—a great distance from the market that is their

source of customers, partners, and investors. The metals and electronics industries have been

industry leaders in equipment and R&D investments. The Office of the Chief Scientist

promotes industrial R&D and, consequently, increased industrial exports. Hi tech industry of

Israel is very much growing than the other sector of Israel.

COMPARATIVE POSITION:

In Israel Science and Technology Collaboration and Space Collaboration show tremendous

growth and relation with India and in the future also there are great opportunities for more co-

relation between these two countries and the explanation for the same is as follows: 6SCIENCE & TECHNOLOGY COLLABORATION

6 Citings from Science and Technology Collaboration derived on March, 8, 2012,

http://www.tradingeconomics.com/data-all-countries.aspx

27

• India is building closer ties with Israel in the areas of nanotechnology, information

technology, water technology and biotechnology.

• In 1999 : The Indo-Israel Joint Symposium on Human Genome was held in Jerusalem

• In July 1999 : 11 proposals were received on Human Genome

• In 1999-2000 : Israel and India were involved in 22 joint research projects

• In 2003 : The two countries proposed to double the investment under the ongoing

science and technology collaboration

• In 2004 : The Ministry of Science and Technology in India signed an MoU with Israel

for jointly funding industrial R&D projects

• In 2005 : India purchased 50 Israeli drones for $220 million

• In 2008 : Israel and India finalised a three-year plan to introduce crops such

as olives, dates and grapes to be introduced and cultivated

SPACE COLLABORATION

• Israel's Minister for Science and Technology has expressed interest in collaborating

with the Indian Space Research Organization (ISRO).

• Israel's TecSAR radar satellite was launched by India on 22 January 2008.

• In March 2009, India launched the RISAT-2 satellite which is based on the

technology employed in Israel's TecSAR.

• There is plenty of scope for coadjuvancy, especially in software, as the Israeli and

Indian technology sectors have differing but complementary characteristics.

• Another opportunity for cooperation lies in new media on the Internet.

• Israelis have a love for trying new things and rapid idea development while Indians

are culturally more conservative and lean more towards the applied and scaleable

aspects of IT engineering as opposed to always trying to break new ground. These

two approaches can balance each other out nicely.

• India and Israel have much to gain from working together, and the possibilities are

endless, with natural areas of cooperation existing in software and IT services.

PRESENT POSITION AND TRENDS OG BUSINESS WITH INDIA

Israel High-Tech Industry towards the 21st Century

28

• The rapidly growing high-tech industry has the potential to grow at an even faster

rate, despite the present economic slowdown - which affects the high-tech field less

than other industries.

• The high-tech industry needs to widen its focus on R&D to include marketing, in

order to capture a larger market share.

• By taking the appropriate strategic decisions, the Israel high-tech industry - with total

sales of some $7.2 billion today - can become, in the coming decade, a $10-15 billion

industry.

• High-Tech Exports

Defence industries

Aircraft

Electronics

Computer-based equipment, robotics and aeronautics

Electro-optics, lasers etc.

In telecommunications

Internet technology

Educational Software and Multimedia

Graphic Arts and Color Printing Technologies

India - Israel Bilateral Trade of high- tech industry 2005-2009 (in millions of US

dollars)

2005 2006 2007 2008 2009*

(Jan-

August)

Israel’s

Import

from India

1276.3 1433.3 1688.8 1648.7 690.3

Israel’s

Export to

India

1224.2 1270.4 1606.7 2363.8 1031.8

Total 2500.5 2703.7 3295.5 4012.5 1722.1

Israel - Gujarat Bilateral Trade of high-tech industry 2005-2009 (in millions of US

dollars)

29

2005 2006 2007 2008 2009*

(Jan-

August)

Israel’s

Import from

Gujarat

176.7 202.5 256.3 298.4 175.3

Israel’s

Export to

Gujarat

378.5 412.5 477.7 503 298.8

Total 555.2 615 734 801.4 474.1

Import and export data of Israel

Imports Exports Balance of

Trade Services Goods Total Services Goods Total

2010 18.1 58.0 76.1 24.2 56.1 80.3 +4.2

2009 17.1 46.0 63.1 21.4 46.3 67.7 +4.6

2008 19.8 64.4 84.2 23.9 57.7 81.6 -2.6

2007 17.5 56.0 73.5 20.3 50.8 71.1 -2.4

2006 14.7 47.2 61.9 18.3 43.9 62.3 +0.4

2005 13.8 43.9 57.7 16.9 40.4 57.3 -0.4

2004 12.9 39.5 52.4 15.4 36.9 52.3 -0.1

2003 11.2 33.3 44.5 13.1 30.4 43.5 -1.0

2002 10.8 32.0 42.8 11.7 27.6 39.3 -3.5

2001 11.9 31.7 43.6 12.5 28.0 40.5 -3.1

2000 12.1 34.7 46.8 15.7 30.9 46.6 -0.2

1999 10.3 30.6 40.8 12.3 25.5 37.8 -3.0

1998 9.3 26.6 35.9 10.1 22.8 32.9 -3.0

1997 9.0 28.2 37.2 9.2 22.6 31.8 -5.4

1996 8.9 28.7 37.6 8.3 21.3 29.6 -8.0

1995 8.3 27.0 35.3 8.0 19.5 27.5 -7.8

(Source: : www.cbs.gov.il).)

30

In today’s globalization the import and export between Israel and India is increasing day by

day. We can say that in above table the total balance of trade of last two years is increased as

compared to last few years in High-tech industry.

POLICIES AND NORMS OF ISRAEL FOR HIGH-TECH INDUSRTY

Certain acts like foreign trade and are exim policy goes a long way in building symbiotic

relationship of Israel with India. the details of the same can be as follows: Foreign Trade

(Development and Regulation) Act, 1992. The Act provides for the development and

regulation of foreign trade by facilitating imports into, and augmenting exports from, India

and for matters connected therewith or incidental thereto. As per the provisions of the Act,

the Government :- (i) may make provisions for facilitating and controlling foreign trade; (ii)

may prohibit, restrict and regulate exports and imports, in all or specified cases as well as

subject them to exemptions; (iii) is authorized to formulate and announce an export and

import policy and also amend the same from time to time, by notification in the Official

Gazette; (iv) is also authorized to appoint a 'Director General of Foreign Trade' for the

purpose of the Act, including formulation and implementation of the export-import policy.

New Foreign Trade Policy (EXIM Policy)

A vigorous export-led growth strategy of doubling India’s share in global merchandise trade

(in the next five years), with a focus on the sectors having prospects for export expansion and

potential for employment generation, constitute the main plank of the policy

Accordingly, the Ministry of Commerce and Industry has been set up as the most important

organ concerned with the promotion and regulation of foreign trade in India. Various

strategies are being employed for achieving the strategic alliance with Indian government.

The various objectives for the same can be mentioned as follows:

The key strategies for achieving its objectives include:

• Unshackling of controls and creating an atmosphere of trust and transparency

• Avoiding inverted duty structure and ensuring that domestic sectors are not

disadvantaged in trade agreements

• Neutralizing incidence of all levies on inputs used in export products

• Facilitating development of India as a global hub for manufacturing, trading and

services

31

• Identifying and nurturing special focus areas to generate additional employment

opportunities, particularly in semi-urban and rural areas

• Simplifying procedures and bringing down transaction costs

• Facilitating technological and infrastructural up gradation of the Indian economy,

especially through import of capital goods and equipment

• Upgrading the infrastructure network related to the entire foreign trade chain to

international standards.

Foreign Trade Policy For Hi-tech Industry

Throughout the 1990’s, mass immigration from the former Soviet Union, proactive economic

policies, fiscal and monetary reforms pursued by the Israeli government, initiated a period of

innovation and growth.

Developments in the balance of trade since the last review

International trade (exports plus imports) of goods and services amounted to 87.1% of GDP

(up from 78.4%). In fact, imports represent 31% of the resources of the Israeli economy while

exports represent more than 25% of the uses.

Unilateral trade liberalization

Israel has unilaterally liberalized its import policy from relatively a large number of

Countries which were subject to import licensing mechanism at the time the last review was

written. In addition Israel has reviewed and liberalized the Free Import Order of 1978 dealing

with free import of goods into Israel subject to import licensing requirements and/or

standards, so as to ensure the safety and security of consumers and the public as a whole. As

a result, since the last review, the Government of Israel has introduced more transparency

into the import licensing procedures, thereby removing bureaucratic barriers to trade.

Annual Supplement

Samples for all exporters

Duty free import of samples up to Rs. 75,000/- (Presently Rs. 60,000/) would be allowed for

all exporters.

Service tax on exporters

Exemption / Remission of Service Tax on export of goods Service tax on services rendered in

India and utilized by exporters would be exempted / remitted. Remission mechanism would

be institutionalized after working out modalities with Department of Revenue (DoR).

32

Status holders

Categorization of exporters as One to Five Star Export Houses has been changed to Export

Houses & Trading Houses, with rationalization and change in export performance

parameters.

Focus market & product schemes

Expansion of Ceiling, Scope and Coverage

Under Focus Market Scheme (FMS) and Focus Product Scheme (FPS) coverage / scope of

eligible markets / items would be enhanced. Revised allocation for benefits is now Rs.1000

Cr, for exports during 2007-08.

New Markets and Products

16 countries (including 10 from CIS block) are added as new Markets and several value-

added low volume export products have been identified and would be entitled to benefits

under FPS.

Promotion of high-tech products

Duty credit of 10% on incremental export growth would be given as incentive for exporter.

Duty entitlement pass book (DEPB) scheme

While extending the scheme for another year, government has agreed to reimburse the cost of

duty on fuel and special additional duty, on all export related imported goods, to the extent it

is not cenvatable. Benefit may be allowed by notifying Brand rate of DEPB for such

products.

ISRAEL FOREIGN TRADE

Foreign Trade Policy For Hi-tech Industry

Innovation & Technology Policy: 1950-1970

50’s-60’s: Promotion of capital investments in Industry. This stimulated the establishment of

R&D performing MNE in Israel during the 70s & 80s

No policy supporting Industrial R&D till 1969.

Innovation & Technology Policy: 1970-1980

1969-70: Establishment of the Office of the Chief Scientist (OCS)

R&D incentives since 1970 induced a high rate of growth of business sector R&D and a

strong process of learning about innovation

Innovation & Technology Policy: 1980-1990

1977 Implementation of BIRDF

Till the 90s, more than 90 % of R&D subsidies to companies still came through the regular

“R&D Industrial fund”(‘backbone’ program)

33

Yozma Program

In each of Yozma funds the government invested 40% of the capital raised by the fund up to

8 M$.

Each fund had a 5 years option to buy the government share at initial value plus interest.

All management companies were Israeli entities which included partners from both Israeli

and foreign financial institutions.

Government Investment 100M$ that leveraged

150M$ from private investors

Created 1+10 private VC Funds

Limited Partnership form of VC organization

Upside incentives and planned privatization

Technological Incubator Program

28 Incubators were established during 1991-1993

4 of them were closedown

Its privatization began at 2001- almost finished

Its official objectives were:

Supporting entrepreneurs at the earliest stages of Technological development

Create new employment opportunities for Technologically skilled persons (immigrants)

CONCLUSIONS AND RECOMMENDATIONS

• There is huge potential in increasing ties between Gujarat state and Israel, especially

in the fields of innovation, biotechnology, nano technology and energy.

• Israeli companies are willing to help increase in production of milk in the state as

average cow milk yield is about 12,000 litres per year in Israel as against the yield of

2,000 litres per cow in India. (Main collaboration with AMUL)

• Ninety fiver per cent of water is recycled and sued in Israel and the same technology

can be used in Gujarat.

• Deserts are bloomed in Israel, and it can also be done in Gujarat.

• Israeli companies such as Netafim and Makhteshim-Agan are making investments in

Gujarat.

• India export more than 200 lie detector that the part of Hi-tech industries.

CONCLUSION

34

Israel High-Tech Industry toward the 21st Century:

• It is less affected than other industries by the political and economic situation.

• It is an integral part of the Israel economy.

• There are benefits to be derived by cooling down the local market and lowering inflation

rates to West European levels.

• As per this reports we found that trade relation between India and Israel have been rising

since 1992 in different sectors.

• India is building closer ties with Israel in the areas of nanotechnology, information

technology, water technology and biotechnology as far as high-tech industry.

• The rapidly growing high-tech industry has the potential to grow at an even faster rate,

despite the present economic slowdown - which affects the high-tech field less than other

industries.

• The structure of the hi-tech industries are organized there are many R&D centers are

established in Israel for hi tech industry.

RECOMMENDATIONS

• Indian government should try to co-operate more and more with Israel in high-tech

industry for the technological development of the country.

• Same way, Indian government should also focus more on agriculture and water

technologies of Israel as 70% of Indian population is dependent upon agriculture.

• Policies for the expansion of companies (i.e. Netafim) should be liberalized in India

for more development.

• Indian farmers should try to implement water technologies of Israel for more

production and government should also help them in implementing these technologies

and purchasing all relevant products.

• If Indian government wants to develop high tech industry then they have to increase

the import and export with Israel.

• The Indian government should organize the seminars about the high tech technologies

which are used in current scenario, so that they will be able to know about

requirements of new equipments in the country and hence also indirectly import-

export will be increased.

35

A Study of Agricultural Industry in Israel

The history of scientific research in Israel is an integral part of the story of the return of the

Jewish people to its homeland. Today, agriculture in Israel is comprised of plant crops,

afforestation and gardening, raising livestock, and livestock products. Diversification and

growth in types of plant crops and livestock breeding has increased over time. Methods of

cultivation have also improved, and Israel continues to develop more efficient forms of

irrigation, greenhouses, and mechanical equipment for processing and harvesting crops.

Today, agriculture represents a mere 2.7% of the Israeli gross domestic product (GDP) and

just under three percent of exports, compared to an average of 30% of exports during the

1960s - the heyday of the famous Jaffa orange. In 2010, only approximately 50,000 people

were employed in farming, constituting less than two percent of the country's workforce.7

Structure, Functions and Business Activities

Comparative Position of agriculture Industry with India and Gujarat

Seeds The turnover of the Indian seed

industry is estimated at $1 billion.

In the private sector alone, about 200

companies, including multinationals, and

joint ventures play a dominant role in seed

production for cereals, cash crops and a

variety of fruits and vegetables.

7 Ministry of agriculture, Israel

36

India ranks eighth among the world's

top 10 seed producing countries

Floriculture Floriculture exports from India started

in 1992 with a gross projection of 30% per

annum had already set the ball rolling.

By setting up a warehouse in the

Netherlands for storing floriculture exports

before auctions there, helped India realize a

much better value for its prized blooms.

The progressive and enterprising

farmers of Punjab are taking up floriculture

as an alternative to the traditional crops.

Irrigation and Water Irrigation water, in India is drawn

from the two sources - ground and surface.

Wells are the basic means of utilizing

groundwater resources.

More than 45% of the net irrigated

area is dependent on the use of wells as their

resource of water.

The Central Government, in co-

ordination with the state governments, has,

through its various development schemes,

financed the construction of wells, canals and

tanks in an effort to give a boost to the yet

developing irrigation system.

Aquaculture culture Fish and fish products export from

India have increased considerably over the

last three decades, particularly with

development of shrimp culture.

Fresh fish, cuttle fish, squid etc. are

other major items of marine products

exported from India.

The farming community has now

37

become more responsive to the concepts of

environmental friendly and sustainable

aquaculture

Organic farming Organic farming is a pattern of

farming in which the eco-system is preserved

by abstaining from the use of harmful

chemical fertilizers.

As organic agriculture gains

recognition across the world, India is

stepping up efforts to grab substantial efforts

of the pie.

Indian organic farm produce tea,

coffee, spices, fruits, vegetables, cotton,

Basmati rice, neem, oilseeds, pulses and cane

sugar, have already found markets in several

countries.

Dairy In the export market, India's dairy

products are sold mainly in South Asia

(Bangladesh, Sri Lanka) and the Middle East,

while some quantities are also sold in the US

and other developed countries.

"India's dairy sector has been

recording four to five percent annual growth

as against the global average of around one

percent.

38

Chart pertaining to overall Import & export between India-

Israel

Overview of the Bilateral Trade and Cooperation in Agriculture Sector

Agriculture is one of the major areas in which there is a substantive cooperation between the

two countries. . In fact, high-level exchanges took place in the field of Agriculture, including

a visit to India by a high level delegation led by Mr. Shalom Simhon, Minister for Agriculture

and Rural Development, in January 2008, and visits by high level Indian delegations led by

Dr. P.K. Mishra, Secretary (Agriculture and Cooperation) in April 2008 and Shri T. Nanda

Kumar, Secretary (Agriculture & Cooperation) in January 2010. Action Plan for Bilateral

Agriculture Cooperation for 2008-10, was agreed to, during the visit of Dr. P.K. Mishra,

Secretary (Agriculture and Cooperation) in April 2008.

In fact, in the end of January 2011, a new Indo-Israeli Centre for Vegetable Excellence was

inaugurated in Gharaunda in the State of Haryana

In addition, on August 1-6, 2010, Mr. Sukhbir Kataria, Minister of State for Agriculture,

Government of Haryana, visited Israel on an exposure visit on the cultivation technology and

post harvest management of citrus, olives and mango under the Indo-Israel Project of

National Horticulture Mission.

In addition some leading Indian corporate groups and cooperatives including National

Cooperative Union of India, Mahindra & Mahindra, IFFCO Kisan SEZ, Yes Bank, Amul

39

Dairy and Sumul Dairy also visited Israel for tie ups with Israeli companies in the field of

agriculture, horticulture, irrigation and dairying.8

Overview of India-Israel trade

• Bilateral trade grew over six times from around $200 million in 1992 to $1.273 billion in

2002.

• During 2002 bilateral trade grew by more than 40% over 2001. As a result, India moved

up from 14th largest trading partner of Israel globally and 4th largest among Asian

countries in 2001 to 11th and 3rd largest respectively in 2002.

• Two-way trade between India and Israel increased by 77.5% in the month of August

2003, reaching $167.7 million compared to $94.5 million in August 2003.

• Indian exports to Israel for the first eight months of 2003 increased by 45.4%) from

$416.8 million in 2002 to $605.9 million in 2003.

• On the basis of the trade figures, India is now Israel's 2nd largest trading partner in Asia

after Hong Kong, having overtaken Japan.

Policies and Norms of Israel for Agriculture Industry

ISRAEL'S AGRICULTURE POLICY

• As a sector which operates in the peripheral areas under harsh climatic conditions and

consists of many small family farms, it plays an important role in Israel's domestic policy

as an instrument to distribute the population to the rural areas, in protecting the natural

environment, landscape and land and providing the growing population with fresh

produce of a very high quality.

• Difficult weather conditions, water scarcity and unique topography, have all led to the

development of a very effective and efficient agriculture sector, state of the art technology

and advanced knowledge which are recognized and exported throughout the world.

• Israel, a net-food importing country with an agricultural import that has reached 60% of

the total agriculture production value, retains a very balanced agricultural policy in order

to secure the sustainability of this sector and cope with the many challenges it is facing,

using customs tariffs as the main policy tool.

8 Ministry of agriculture, Israel

40

TAX (FISCAL) POLICY:

• In Israel all government activities are highly programmed well into the future, which

remains always a source of hope and anxiety for the country.

• Beyond favorable tax treatment to farmers who opt to reside and work either at the

various Kibbutz and Moshav settlements around the country, most other tax measures and

discounts come in the form of subsidies and grants.

• The last three State Budgets have tried to combine solutions to the simultaneous problems

of increasing deficits with ways to assist economic activity through reductions in

government expenditures and taxes.

• Evidently structural changes in the Israeli economy have now become part of the annual

state budgets and the tools for taxes and incentives to work.

• Tax rates in Israel are high in relation to the standard in western developed nations.

• The budget of 2005 continues the existing policy of lowering taxes and will include the

continued lowering income taxes, lower stamp duty and corporate taxes. This clearly

benefits agriculture both at an individual as well as at a corporate level.9

Policies and Norms of India for Import or export

• Revalidation of Import / Export License / Certificate / Authorisation / Permission:-

• Duplicate Copies of Export-Import Licence / Certificate / Authorisation / Permissions /

CCPs

• Automatic License /Certificate /Authorization /Permission

• Irrevocable Letter of Credit

• Export by post

• Import/ Export through Courier Service

• Import under Lease Financing

• Application for Grant of Export Licence / Certificate / Permission

Present trade barriers for Import / Export

In general, Israel offers a good commercial environment for U.S. companies. The United

States-Israel Free Trade Agreement (FTA) has eliminated almost all tariffs, leaving Israel's

agricultural sector as the only one with substantial barriers. A 1996 Agreement on Trade in

Agricultural Products (ATAP) with the United States permits Israel to maintain non-tariff 9 Israel Land Administration

41

protection for certain agricultural products. This framework expired at the end of 2001 but

the signed agreement was extended until the end of 2009. Under the agreement, Israel permits

free access to a long list of food products and duty-free access for certain quantities of a list

of U.S. products under tariff rate quotas (TRQ).

The U.S. Embassy in Tel Aviv is actively pursuing much-needed improvements in the export

and investment climate for U.S. firms in Israel. The efforts are focused in three specific areas:

incorporating technical standards in Israel that do not discriminate against U.S. products,

protecting intellectual property rights, and establishing greater transparency in Israel’s public

procurement process. For further information about how these issues may affect your export

prospects in Israel, please contact the Commercial Service in Israel.

Other Trade Barriers:-

Registration

A trading license is required in order to conduct trade between India and Israel the license can

be obtained from the economics department at the emirates and is only valid where it was

issued. Trading licenses are held by exclusive commercial “agents.”

Tariffs

Most goods in the Israel have a 5% tariff rate. There are not any tariff quotas, nuisance rates

or duties and taxes on imports. The tariff is based on The Gulf Corporation Council (GCC)

and is duty free within other GCC countries. Many imperative items are duty free such as

agricultural raw materials, food products, pharmaceutical products and others. The exceptions

to the 5% tariff are for alcohol at a 50% tariff and tobacco products at 100% tariff.

Prohibitions

Import/export prohibitions exist in the Israel for several reasons ranging from environmental,

health and safety, religious and even moral reasons. The prohibitions are regulated by the

GCC and include all kinds of items ranging from drugs, counterfeit money, certain toys and

even several types of waste. All imports from Israel are prohibited. The Israel also restricts

any oil export due to its membership with the Organization of Petroleum Exporting Countries

(OPEC).

Customs Valuation

There are several standards and procedures the Israel must comply with as part of the Gulf

Corporation Council Customs Union. In 2001, the Emirates Authority for Standardization

and Metrology (ESMA) was established by law. This law sets standards, regulations and

assessments for health, safety and environmental protection against imports that must meet

42

Israel standards. About 30% of the standards are utilized by the ESMA, 95% are based on

GCC standards and 5% are Israel standards. If national standards are not available for

suppliers to follow, they may follow international standards.10

Potential for Import/Export in India

10 The Israel Center for Social and Economic Progress

43

Business Opportunities in future

A combination of sophisticated, applied science, determination and government support have

helped Israel's farmers to modernize and adapt to changing geopolitical, market and climatic

conditions, creating a strong base from which to proceed in the coming decades.11

CONCLUSIONS AND SUGGESTIONS:

• Agriculture has benefited from high capital inputs and careful development through

planning and assistance from the Government thus making full use of available

technology over a long period.

• The agricultural sector employs 2% of the population and the country's main crops are

fruits and vegetables, cereals, wine and cattle farming.

• The economy of Israel is a technologically advanced market economy, including a

rapidly-developing high-tech and service sector.

• As of 2010, Israel has the 24th largest economy in the world, and ranks 15th among

169 world nations on the UN's Human Development Index, which places it in the

category of "Very Highly Developed".

• Water resource management is crucial to the survival and growth of the country.

• An overall general analysis of the export industry of agricultural products in Israel

shows that the volumes are growing, the volume of exports of processed agricultural

processed products is declining, and imports over exports stand at a ratio of seven in

value and at fifty in quantities.

11 Ministry of agriculture, Israel

44

• Israel's exports represent around 24% of the GNP. They are the backbone of the

country's growth.

• Israel offers a good commercial environment for U.S. companies. The United States-

Israel Free Trade Agreement (FTA) has eliminated almost all tariffs, leaving Israel's

agricultural sector as the only one with substantial barriers.

• Agriculture is not a priority for the government but has serious upstream and

downstream links in the economy. The long-term trend in Government policy is

towards a sharp decline in the overall subsidies to the sector mainly due to the

commitments undertaken in the frame of the WTO membership.

• The overall macroeconomic and political background invariably affects agriculture

and its course.

• The Government is involved in a long-term effort to put its finances in order by

tidying up its fiscal deficits and boost economic activity by cutting down on taxes,

reducing subsidies, eliminating overall deficits by trading, and exporting through an

enlarged economic base.

• One cannot conclude this study by not paying attention to the permanently complex

political and security environment of the country.

45

: A study of Transportation and communication Industry:

Introduction of transportation and communication industry

Transportation and communication are central to the development of any society and its

economy, and early modern Europe was no exception. Despite some significant advances in

the engineering and construction of roads and canals between 1450 and 1750, as well as the

construction of ships and, to a much lesser extent, of carriages and wagons, for the most part

European travel and, therefore communication, remained as it had been in the Middle Ages,

tied to the speeds of man and horse on land, and of wind and current on water. Oceanic

transport made the greatest leaps forward during this period.

Transport system helps to solve the problem of unemployment in rural areas by sending

surplus laborers to the industries and it also solves the needs of industries. Development of

transport system also leads to development of industries because transport system utilizes the

product of industries. Different machineries and raw materials are supplied through roads,

ships, motors, buses, trains, aero planes to industries. It shows that transport system of a

country affects economic development of a country in different manner. Transport system is

regarded as a strong pillar to protect the people from the difficulties of war, natural calamities

and other problems. Transfer of military equipment, soldiers and war heads is possible only

through a developed transport system during war. A developed transport system is necessary

to send necessary helps to the affected people during the period of natural calamities.

Communication is the medium of sending information and news. Communication system

helps industrialists and business communities to take right decisions at right time by

providing them information’s and news related with business and financial matter. It is

possible to know about the price of the commodity prevailing at any part of the world in no

time and also helps to operate their business according to that through communication

system. So, communication system facilitates economic development by sending information.

It is possible to change the outlook and style of living of the people according to changing

conditions of the world.

2.2 Role of Transport & Communication Industry in Israel

Beginning in 1948, the government invested large sums to develop a first-class transportation

infrastructure. The main projects undertaken were the construction of the Qishon element of

46

the harbor at Haifa and the Ashdod port, the building of railroads between Haifa and Tel

Aviv and from Tel Aviv south to Beersheba, Dimona, and Zin, and the construction of

several major roads in the center of the country as well as many new roads in peripheral

regions. Rapid economic growth and the removal of the limitation on importing private cars

and buses created a growing demand for transportation services in the early 1960s. This

demand was met by increased public transportation services and by private transportation

expenditures. In 1984 the subsidy on public transport equaled US$13 million. In 1985 Israel's

13,410 kilometers of roads were used by 776,000 vehicles, of which about 624,000 were

private cars, about 115,000 were trucks and other commercial vehicles, and about 5,500 were

buses. In 1988 there were two main public carriers--Egged, with about 4,000 buses operating

throughout the country, and Dan, with approximately 1,500 buses. Both of these carriers were

cooperatives that charged subsidized tariffs determined by agreement with the government.

Israel also had a government-run railroad system. In 1986 there were 528 kilometers of state-

owned railroad linking Jerusalem, Tel Aviv, Haifa, and Beersheba. The government had a

long-term plan to extend the Beersheba line along the Dead Sea and south to Elat and to

develop a rapid rail line from Petah Tiqwa to Tel Aviv. Total railroad passenger traffic was

2,814,000 in 1985, and total freight carried (primarily phosphates, grains, coal, and potash)

was 6,086,000 tons. Given the government status of the rail system, however, it could not

compete with other transportation modes. Between 1965 and 1985, railroad use declined

because of cutbacks in rail services. In 1986 travel by truck or car was faster than by rail on

all lines except the Haifa-Tel Aviv line, where it was identical.

• Improving Public Transport Management

• Subsidized Public Transport

Structure, functions and Business Activity

Rail transport, Major Projects for Rail Investments:

1. The Tel Aviv-Jerusalem Express Line

2. The Eilat Railway (in planning)

3. The Eastern Railway Line (in planning)

Road Infrastucture

• Road 22 (Krayot bypass)

47

• Road 16 (Jerusalem Entrance)

• Cross Israel Highway

• Fast lane on Highway 1 entering Tel Aviv from the east

• Carmel Tunnels (Haifa)

• Maritime Transport

• Seaways

Present Position, Trend and Overview of Israel

Comparative position of Transport & communication Industry of Israel with India.

Transportation is done in three major ways:

Land transport

1. Road transport

2. Pipeline transport

3. Railway transport

Water transport

1. Inland waterways

2. Seaways and Oceanic waterways

Air transport

1. International airways

2. National airways

Classifications of roads in India, For the purpose of construction and maintenance, roads are

classified as:

• Nation Highways:

• State Highways:

• District Roads:

• Rail Transport

• Water Transport

• Oceanic Routes

• Air Transportation

Trends of business of Transport & communication Industry

48

(Source: http://itrade.gov.il/india/israel-india/)

Indian companies with presence in Israel:

• Tata Consultancy Services (TCS Israel, 2005)

• Jain Irrigation (Naandan Jain Irrigation)

• State Bank of India (SBI, Ramat Gan Branch, 2007)

• Tejas Networks (Tejas Israel, 2009)

(Source: http://itrade.gov.il/india/israel-india/)

49

(Source: http://itrade.gov.il/india/israel-india/)

50

(Source: http://itrade.gov.il/india/israel-india/)

Overview of India-Israel trade Policy

Embassies in New Delhi and Tel Aviv, relations between India and Israel have made good

progress. Bilateral trade grew over six times from around $200 million in 1992 to $1.273

billion in 2002. During 2002 bilateral trade grew by more than 40% over 2001. As a result,

India moved up from 14th largest trading partner of Israel globally and 4th largest among

Asian countries in 2001 to 11th and 3rd largest respectively in 2002. India's exports to Israel

grew by over 52% in 2002 from $429.5 million in 2001 to $653.2 million.

Two-way trade between India and Israel increased by 28.4% during me period January-

August 2003 reaching $1052.5 million compared to $819.9 million in the corresponding

period last year. Two-way trade increased by 77.5% in the month of August 2003, reaching

$167.7 million compared to $94.5 million in August 2003. Indian exports to Israel for the

first eight months of 2003 increased by 45.4%) from $416.8 million in 2002 to $605.9 million

in 2003.

51

Israeli exports to India for the first eight months of 2003 increased by 10.8%), from $403.1

million in 2002 to $446.6 million in 2003. Share of India's exports in Israel's global imports

increased from 1.9% in 2002 to 2.8% in 2003. On the basis of the trade figures, India is now

Israel's 2nd largest trading partner in Asia after Hong Kong, having overtaken Japan. Over

the last few years, there have been an increasing number of Indian products in the Israeli

market.

4.2 Policies and Norms of Israel

Policies Related to Transportation & Communication Industry

• Committee for Information, Computer and Communications Policy (ICCP):

• Working Party on Telecommunication and Information Services Policy (TISP):

• Ministry of Transportable TV and satellite broadcasting Policy:

Policies and Norms of India

1. Revalidation of Import / Export License / Certificate / Authorisation / Permission

2. Duplicate Copies of Export-Import Licence / Certificate / Authorisation / Permissions /

CCPs

3. Automatic License /Certificate /Authorization /Permission

4. Irrevocable Letter of Credit

5. Export by post

6. Import/ Export through Courier Service

7. Import under Lease Financing

8. Application for Grant of Export Licence / Certificate / Permission

Present trade barriers for Import / Export

There has been a steady strengthening of India's relationship with Israel ever since India

established full diplomatic relations with Israel in 1992, despite Indian attempts to keep this

flourishing bilateral relationship out of public view. This bilateral relationship assumed an

altogether new dynamic and came under full public scrutiny with the visit of Ariel Sharon to

India in September 2003, the first ever by a ruling Israeli prime minister. The excitement

surrounding this visit and the future prospects of Indo-Israeli relationship signaled the sea

change in relations between the two states. In sharp contrast to the back-channel security ties

that existed even before the normalization of bilateral relations, India now seems more

willing to openly carve out a mutually beneficial bilateral relationship with Israel, including

deepening military ties and countering the threat posed by terrorism to the two societies.

52

A flourishing Indo-Israeli relationship has the potential to make a significant impact on

global politics by altering the balance of power, not only in South Asia and the Middle East,

but also in the larger Asian region, which has been in a state of flux in recent times. However,

notwithstanding the convergence of interests on a range of issues between India and Israel,

this bilateral relationship will have to be carefully managed because of a host of constraints

which circumscribe this relationship. This study examines those factors which are bringing

the two nations increasingly closer and the constraints that might make it difficult for this

relationship to achieve its full potential. First, the historical underpinnings of the Indo-Israeli

relationship are examined in brief. Subsequently, the convergence of Indo-Israeli interests on

some important issues is analyzed with special reference to countering terrorism and the

growing defense relationship. Finally, the constraints within which this relationship will have

to operate in the near future are examined.

India recognized the state of Israel in 1950, two years after its establishment in 1948.

However, diplomatic relations were not established until 1992. This was mainly because of

India's support and sympathies with the Palestinian cause. India was a founder member of the

Non-Aligned Movement (NAM) that was supportive of anti-colonial struggles around the

world and this also meant strong support for the Palestine Liberation Organization (PLO).

India became one of the first non-Arab states to recognize Palestinian independence and also

one of the first to allow an embassy of the PLO in its capital.

India's anti-Israel stance was also part of the larger Indian diplomatic strategy of trying to

counter Pakistan's influence in the Arab world and of safeguarding its oil supplies from Arab

countries. It also ensured jobs for thousands of Indians in the Gulf, helping India to keep its

foreign exchange reserves afloat. India and Israel also ended up on the opposite sides during

the Cold War, with the United States strongly supporting Israel, while India's sympathies

were toward the Soviet Union. The Congress Party in India, the dominant force in Indian

politics since India's independence in 1947, opposed Israel in large part because it viewed

Israel as the analogue of Pakistan, a state based on religion. This also hampered growth of

Indo-Israeli ties in the immediate aftermath of Indian independence.

Despite this, however, it is remarkable that India and Israel managed to come together on a

range of issues, especially the close collaboration between the Indian intelligence agency,

RAW (Research and Analysis Wing) and Israel's Mossad. This collaboration was the result of

a secret cooperation agreement in the area of security, intelligence and military equipment.

Israel also never hesitated to come to India's defense, publicly and vigorously, in most of

India's major conflicts. While India got tacit help and support from Israel during its 1962 war

53

with China and 1965 war with Pakistan, India's relations with Israel went downhill in the

early seventies with the worsening of the Arab-Israeli dispute after the 1967 war.

It is also important to note that Jews have been a part of India for well over a thousand years.

The most distinctive aspect of the Indian Jewish experience is the complete absence of

discrimination by the host majority. Jews have lived in India without any fear of persecution,

a fact that has been well appreciated by Israel. Even though the Jewish population in India is

estimated to be around 6,000--following the emigration of over 25,000 to Israel between the

1950s and 1970s--the community's contributions to India remain substantive.

After the end of the Cold War and the collapse of the Soviet Union, India was forced to

reorient its foreign policy to accommodate the changing international milieu. India also

embarked on a path of economic liberalization, forcing it to open its markets to other nations.

It was in 1992 that India granted full diplomatic recognition to Israel, leading India and Israel

to establish embassies in each other's country. Since then, the Indo-Israeli bilateral

relationship has attained a new dynamic with a significant upward trend. However, while the

exchanges in diverse fields intensified, the overall connection deliberately remained low

profile. Such an approach was thought to be necessary in order to insulate the other interests

India had in the Middle East from being affected by the Arab animosity towards Israel. In this

context, Ariel Sharon's visit to India in September 2003 was an important benchmark in that

it made clear to the world that India was no longer shy about its burgeoning relationship with

Israel.

Other Trade Barriers:-

• Registration

• Tariffs

• Prohibitions

• Customs Valuation

Potential for Import/Export in India

Objectives

• To provide safe, convenient transportation and communications systems for all users,

including pedestrians.

• To provide good access to the locations of major economic activity.

• To facilitate local urban and rural development.

54

• To support access facilities to inhabited offshore islands.

• To promote and support the safe use of the road network.

• To safeguard carrying capacity of National Roads and other strategic routes.

• To support communications improvements into the County.

• To remove traffic bottlenecks and to reduce journey times and journey variances.

• To improve access to ferry ports and airports.

• To support the Rural Transport Initiative.

• To identify future potential relief roads around the Gateway town of Letterkenny.

• To improve the extent and form of signage throughout the County.

AIR, SEA AND RAIL

• Improving and maintaining the road network to and from Donegal (Carrickfinn) Airport

through the roads work programme including the ongoing upgrade of the R259 from

Crolly towards Donegal (Carrickfinn)

• Airport and realignment of R259 airport junction.

• Supporting the airports at Strandhill and Derry through a programme of road

improvement in the hinterlands of the airports. Facilitate and actively pursue the

development of an airstrip at Tory Island.

SEA

• The Council recognises the importance of Killybegs, Burtonport, Greencastle,

Lisahally and Sligo as sea/fishing ports to serve Donegal. Given this fact, the Council

will strive to facilitate the transport network to and from these ports.

• The Council will pursue improvements to the transport network to an from ferry ports

within the County, (Greencastle, Buncrana, Rathmullan, Magheraroarty, Burtonport,

Bunbeg, Tory and Arranmore).

• The Council will pursue a long-term strategy to develop a ferry link to Scotland/NW

England.

• The Council is committed to an ongoing programme of maintenance and

improvement of such infrastructure. The Council will prepare an Island Strategy

setting out in detail specific policies and programmes for the development of the

Islands.

55

RAIL

• The Council will pursue the following strategy to maintain and develop rai links into

and throughout the County.

• Undertake a preliminary study (within 2 years of the adoption of this Development

Plan) into the potential of rail links into and throughout the County in order to identify

likely costs, preferred routes, feasible services etc. This study would be completed in

co-operation between all relevant departments, agencies, and authorities on a cross

border basis.

• Safeguard the intact routes of the old railway network and associated structures within

the County in order to facilitate their re-integration into the transport network (or to

facilitate their use as cycling or walking routes) in the medium to long term.

• Actively support efforts by Northern Ireland Railways and Iarnrod Eireann to

maintain and develop the rail services to Derry and Sligo respectively.

• Facilitate the re-establishment of a rail link between Sligo and Derry (through

Donegal via Letterkenny) in order to make possible direct rail services along the

Western Transport Corridor between Derry and Limerick.

Potential for Communication Sector

(Source:http://trak.in/tags/business/2011/08/09/india-mobile-telecom-subscriber-

growth-june-2011/)

56

(Source:http://www.91mobiles.com/blog/2088/97++Indians+To+Own+Mobile+Phones+

by+2014.html)

Business Opportunity for Transportation & communication

Internal transportation and communications are fairly well developed. The country is covered

extensively by rail and road networks, supplemented by airline routes among the major cities.

The Indian railroad system has a route length of about 62,500 kilometers (38,800 miles) and

is the largest public sector undertaking in the country. Road transport plays an important role

in internal transportation, and its share in both goods and passenger traffic is increasing.

Many states and union territories have nationalized passenger road transport in varying

degrees, but road freight traffic remains almost exclusively in the private sector. Scheduled

air services are operated by two public sector corporations (Air India, for international routes;

Indian Airlines, for domestic routes) as well as by a number of private airlines.

Information technology (IT) is amongst the fastest growing sectors in the country. Its

contribution to GDP rose from 1.2 per cent in 1999-2000 to 5.2 per cent in 2006-07 and to an

estimated 5.5 per cent in 2007-08. Growth of Indian IT industry has been driven by the IT

software and services (IT services) and IT enabled services (ITES). The software and services

(IT services) industry of India has been moving up the value chain, giving India formidable

brand equity in the global markets. The Indian software and services exports including ITES-

BPO are estimated at US$ 40.3 billion (Rs. 163,000 crore) in 2007-08 as compared to US$

31.4 billion (Rs. 141,000 crore) in 2006-07, showing an increase of 28.3 per cent in dollar

57

terms and 15.6 per cent in rupee terms. Indian companies are expanding their service

offerings, enabling customers to deepen their offshore engagements and shifting from low-

end business processes to higher ones. They are also enhancing their global service delivery

capabilities through a combination of Greenfield initiatives, cross-border mergers and

acquisitions, as well as partnerships and alliances with local players. This has helped them

execute end-to-end delivery of new services.

Also, a majority of companies have already aligned their internal processes and practices to

international standards such as International Organization for Standardization (ISO);

Capability Maturity Model (CMM); and Six Sigma. This has helped establish India as a

credible sourcing destination. As of December 2007, over 498 India based centers (both

Indian firms as well as MNC owned captives) have acquired quality certifications with 85

companies certified at Software Engineering Institute (SEI), Carnegie Mellon Capability

Maturity Model (CMM) Level 5 (higher than any other country in the world).

Department of Electronics and Information Technology (DIT) is the nodal organization in the

country, responsible for formulation, implementation and review of national policies in the

field of information technology. All policy matters relating to silicon facility; internet;

computer based information technology and processing including hardware and software;

standardization of procedures and matters relating to international bodies; promotion of

knowledge based enterprises; e-commerce; information technology education; etc are

addressed by it.

OVERALL CONCLUSION & SUGGESTION

Bilateral relations between India and Israel have strengthened significantly in recent years

with both nations experiencing a convergence of interests on a range of issues. At its heart,

however, this relationship still remains driven by close defense ties and recognition of a

common foe in Islamist terrorism. Though attempts are being made by both sides to broaden

the base of their relationship, significant constraints remain, preventing this relationship from

achieving its full potential. Both sides will have to navigate their relationship carefully

through these constraints. The current international environment, however, is particularly

favorable to a deepening of Indo-Israeli ties. How far the two sides are willing to make use of

this opportunity depends ultimately on the political will in the two states.

The people of India and Israel have a long history of civilization contact and it is only natural

for the two states to cooperate more closely with each other on issues ranging from defense

cooperation and counterterrorism to trade and cultural exchanges. There are significant

58

mutual benefits that the two states can gain from a vibrant partnership with each other.

Israel's rapid demographic and economic growth is far beyond the rate of similarly developed

countries. This high growth level has generated an increase in the demand for means of

transportation. This in turn calls for expanded investment in transportation infrastructure and

constant regulatory updating to maintain and improve the overall level of transportation

services offered to the public. In the last decade, the development of transportation in Israel

has moved into high gear. In all areas of transport – by land and sea and air – there has been

an increase in infrastructure investment, far-reaching reforms and technological advances,

and reforms and technological advances, and competition has grown. While this period was

characterized by an increase in both the population and the national product, according to all

indicators the growth in transportation far exceeded that of other sectors. Despite the

significant increase in infrastructure investment, the rate of development has not reflected the

rate of growth in the various transportation fields and as a result the overall level of service

has not improved.

A number of important transport projects are now at the implementation and advanced

planning stages. It is anticipated that the development and operation of these projects will

have a significant impact on the transport sector and on the economy as a whole.

The development of transportation services is of vital importance to the State of Israel, both

to promote economic growth, and as a source of employment and increased productivity. For

the past decade, every government in Israel has set transportation development as a central

national goal, and supported this policy with legislation, wide-ranging reforms and increased

budgets. This policy is strongly supported by the current government, which aims to increase

efficiency and competition, and encourage private sector involvement in financing,

implementing and operating major transport projects.India is the largest customer of Israeli

military equipment and Israel is the second-largest military partner of India after the Russian

Federation. As of 2009, the military business between the two nations is worth around US$9

billion. Military and strategic ties between the two nations extend to joint military training

and space technology. India is Israel's largest defense market, accounting for almost fifty

percent of Israeli sales. India is also the second-largest Asian economic partner of Israel.

So, the growth of defense sector is due to Israel and India is also top partner of Israel in terms

of economy in comparison with any other Asian countries so to do more and more business

and also for growth and development of India we should maintain good relation with Israel.

So for the growth of Indian economy Israel country has its own contribution

59

: A study of Textile Industry: Introduction of the textile industry and its role in the economy of Israel The textile industry includes every business involved in growing or producing fibers, such as

sheep farmers and cotton growers; those who make the fiber into thread; those who make the

thread into cloth; and those who dye, bleach and finish the cloth.The textile industry also

includes chemical companies that make synthetic fibers and all the resultant products. Then

there are the wholesalers and retailers of all these textiles, and the products that are made

from them. 12

History of Israel textile industry

In the 1970's and 80's, Arab villages in Israel provided the owners of textile plants with a

cheap workforce, consisting mostly of young unmarried women. Lately they have ceased to

be useful. The Oslo Accords have opened the way to even cheaper labor. Thousands of Arab

women in Galilee are now unemployed, while the owners are making fortunes in the new

Middle East. 13

Post industrial revolution

Many of the cotton mills, like the one in Lowell MA, in the US originally started with the

intention of hiring local farm girls for a few years. The mill job was designed to give them a

bit more money before they went back to the farm life. With the inflow of cheap labor from

Ireland during the potato famine, the setup changed, as the girls became easily replaceable.

Cotton mills were full of the loud clanking of the looms, as well as lint and cotton fiber.

When the mills were first built a worker would work anywhere from one to four looms. As

the design for the loom improved so that it stopped itself whenever a thread broke, and

automatically refilled the shuttle, the number of machines a worker could work increased to

up to 50.

Significance

The textile industry affects every aspect of our lives. There are textiles in our cars, on our

furniture, hanging at our windows, in the carpeting on the floors in our vehicles, homes and

workplaces, and in the clothing on our backs. We dry ourselves with towels and sleep on

12 http://www.ehow.com/about_5058971_definition-textile-industry.html 13 http://www.inminds.com/article.php?id=10218#r1

60

sheets made by the textile industry. There are even textiles in the bag that carries your laptop

computer from place to place.

Effects

Whole industries rely on the textile industry for their own products, such as the fashion and

furniture industries, and the carpet and rug manufacturing industry. The textile industry also

serves other segments of the marketplace, such as those involved in the textile arts like

quilters and knitters. Even painters rely on the textile industry for canvas on which to paint.

Other artists are actually part of the textile industry: those who sell their designs to fabric

manufacturers, who print those designs directly on the fabric they make. There are industries

that have been built on serving the textile industry, such as weaving machinery

manufacturers, and even software providers who customize software for the textile industry.

Size

The textile industry is a multi-billion-dollar industry. One small component of the industry

alone--the organic cotton growers (which excludes growers who don't farm with organic

methods and all other components of the industry)--reached an estimated $3.2 billion in 2008,

according to the nonprofit Organic Exchange.

Considerations

Other industries that rely on the textile industry for the success of their own business include

manufacturers of embellishments used on clothing, such as buttons, sequins and zippers; and

manufacturers of sewing machines, knitting needles and drapery hardware, just to name a

few.

Role of textile industry in the economy of Israel

Israel’s Textile Industry Weaves a High-Tech Blend

Biotech, software, and telecom are just a few well-known sectors of Israel’s economy where

innovations have come to the fore. While the country’s textile industry has undergone many

changes in recent years, its unique blend of advanced technology and good design keep it on

the cutting edge.

The expansion of Israel's textile industry was also a result of the development of cotton

growing in Israel as a profitable agricultural branch. Following successful experiments in

1953, the cotton-planted areas were expanded from 300 dunams in 1953 to 290,000 dunams

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on irrigated land and 32,000 dunams on unirrigated land, a total of approximately 330,000

dunams. The output of cotton fiber grew from 95 kg. perdunam in 1955 to 130 kg. perdunam

in 1969. The total output of cotton grew from 2,000 tons in 1955 to 39,200 tons in 1969,

when 21,000 tons of cotton were exported and about 18,000 tons were sold to the local

industry. The carding machines were set up in various places in the cotton-growing areas.

About 400 tons of wool were produced in 1969 by local sheep, but of this only 100 tons were

sold to the local textile industry. The majority of the raw material for Israel's wool industry is

therefore imported. Other raw materials for the textile industry are also imported.

Structure and major players of textile industry in Israel

Structure of Israel textile industry

The delegation of Israel contended, inter alia, that there had been structural changes in Israel's

cotton textile industry, which was now concentrating on more sophisticated and higher value

products, that wage rates in the industry had risen to Western European levels, and that

landed prices of cotton textile imports from Israel were as high as, or higher than, those of

comparable goods produced in the United Kingdom Orin non-restricted supplier countries.

The United Kingdom delegation contended that the action taken by the United Kingdom in

continuing to apply the quota system to Israel in 1972 was justified and necessary given the

high degree of import penetration of the United Kingdom cotton textile market by a large

number of suppliers and the consequent danger of market disruption.

Manufacturing textile in Israel sounds like an unrealistic idea these days. A well-known

company the Delta company moves all its production activity to neighboring Arab states and

other companies prefer manufacturing in China – Arad Towels continues to manufacture

towels and uniform for the world's institutional market.

One other giant of Israel Arad Towels has become the biggest supplier of its kinds of towels

and bedclothes for hospitals and hotels. Eight months ago, the company entered the retail

market for the first time, opening three stores – in Arad, the Dead Sea and Eilat. Two

additional stores are expected to open in Tel Aviv and in northern Israel by the end of the

year. In 1992, following the former Soviet Union, Heiman established a factory for work

clothes named Standard Textile Israel in MigdalHa'emek, which was later merged with Arad

Towels. The factory supplies work clothes mainly to operating rooms and hospitals.

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Comparative Position of textile Industry with India and Gujarat

India and Israel would be widening their area of interaction in the coming years by including

various other sectors than the conventional ones in which they have been working in recent

years Research and development would be the main sector in which both countries are

interested. Bilateral trade between India and Israel stood at $5.2 billion for 2010-2011 with

exports at $3 billion and imports at $2.2 billion.

Indian Export Market in Textile Industry

The textile and garment sectors play an extremely significant role in India in terms especially

of share in value added, foreign exchange earnings, and employment. With the impending

dismantling of quotas in 2004 under mandate from the Agreement in Textile and Clothing of

the WTO, the focus has clearly shifted to the future of the Indian textile and clothing exports.

This study is an attempt to evaluate export-competitiveness of the Indian textile and garment

exports with a view to assessing the competitive sinews in preparation for the quota-free trade

beyond 2004.

Global trade in textile and clothing: India’s competitive performance

During the MFA period, the textile exporters from industrial countries and those from

developing countries merely changed shares between themselves during the 24 years period.

The share of industrial countries declined by almost as much (19.2%) as was the gain in the

share of developing countries (18.8%). Clothing exporters13, however, exhibit significant

changes, with the share of top 13 exporters having declined by 13.8%. New entrants have

come in as well as some old ones have been knocked out. Of these new entrants, most- if not

all- are from developing countries, since the share of industrial countries has declined during

the period, and that of developing countries has increased. The countries that are gaining

share in clothing exports are the ones whose industries are integrated to one or the other

advanced country through some policy-induced preferential arrangements. Mexico,

Caribbean region, East European countries and Mediterranean countries are capturing much

of the space vacated. There has been a much deeper globalization in clothing than in textiles.

Indeed, that has been one of the principal reasons for the developed countries agreeing to an

eventual phase-out of MFA quota in the UR of negotiations.

63

INVESTMENT AND GROWTH IN TEXTILE INDUSTRY IN INDIA AND ISREAL

In India - The textile industry is one of the major sectors of Indian economy largely

contributing towards the growth of the country's industrial sector. Textiles sector contributes

to 14 per cent of industrial production, 4 per cent of National GDP and 10.63 per cent of

country's export earnings. Textile sector in India provides direct employment to over 35

million people and holds the second position after the agriculture sector in providing

employment to the masses.

Present Position and Trend of Business (import / export) with India / Gujarat during

last 3 to 5 years

Textile Industry in India

The Indian Textiles Industry has an overwhelming presence in the economic life of the

country. Under 11th Five Year Plan (FYP) it was projected to accelerate to a growth rate of

16 per cent in value and should reach the value of USD 115 billion (exports USD 55 billion

and domestic market USD 60 billion) by 2012. Exports are likely to reach USD 32 billion in

2011-12 and domestic market USD 55 billion.

India’s Textile exports % - FY 2010

Source: ministry of trade, government of India

India’s Textile Exports (in US$ billions)

64

Chart No. 2

Source: ministry of trade, government of India

Textile Industry in Gujarat

Gujarat is one of the leading industrial states in India and textile industry in particular had

contributed in a big way to the industrialization of the State. In fact, development of many

industries likes, Dyestuff, Chemicals, Engineering/Foundry and Cotton farming is solely

dependent on this sector. The State is well known for development of Hy-breed Cotton,

Ginning, power looms, composite mills, spinning units and independent processing Houses.

Export and Import of Textile in Israel

India-Israel Relationship

Since establishment of diplomatic relations in 1992, bilateral trade and economic relations

have progressed rapidly. From a base of US$ 200 million in 1992 (comprising primarily of

diamonds), merchandise trade has diversified and reached US$ 5.15 billion in 2011.

Profile of Indian exports to Israel:-

- India's exports have grown from $ 62 million in 2001 to over $ 1108 million

- In 2010, an almost 18 fold increase, even though Israel's global imports grew only by 2.5

fold.

- India's market share of Israel's imports has also grown consistently, from 0.37% in 2001

65

to 2.7 % in 2010.

- •Out of 19 sectors, India’s exports to Israel have grown in 16 sectors which together

account for almost 99.1% of Indian exports to Israel. Almost all manufactured products

have witnessed growth.

- •High growth rate of over 50% were witnessed in 3 sectors. These were (a) plants and

vegetable products (59.68%); (b) Mineral products (69.75%); and(c) Base metals

(63.86%).

- •Barring one sector i.e. Footwear and Headgear, growth has been in double digits in all

other sectors.

• After diamonds, textiles constitute the largest sector of Indian exports to Israel followed

by chemicals, rubber and plastic products, machinery, base metals and plant and

vegetable products.

• Precious stones and metals: Trade in this area is comprised primarily of diamonds. This

sector, the largest in India's export basket to Israel, grew by26.53% from $ 616.9 million

in 2009 to $ 780.6 million in 2010.

Policies and Norms of Israel for textile Industry for import / export including licensing / permission, taxation

ISRAEL: Policy framework

Israel has a sophisticated business regulatory environment in which foreign investors are

treated equally as their Israeli counterparts. The Israeli legal system provides fundamental

guarantees largely comparable to those provided by developed countries. Foreign currency

transactions are free of controls. The country has a well developed Competition Law whose

enforcement is entrusted to independent regulatory authority. As an important producer of

intellectual property, Israel has made substantial changes to its Intellectual Property (IP)

legal framework.

Foreign investors wishing to operate in Israel via an incorporated enterprise are subject to

ordinary corporate registration requirements, except in cases where they seek approved

status in order to be eligible for special incentives and assistance under the Law for the

Encouragement of Capital Investments. Foreign companies wishing to maintain a place of

business in Israel, other than by creating a subsidiary, are to register as such with the

Registrar of Companies and nominate an Israeli resident to have power of attorney and be

capable of receiving notices for the company. A foreign company must file an annual

report each year, if so required. Company documents must be translated into Hebrew.

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Policy and regulatory framework of India

The Ministry of Textiles is responsible for policy formulation, planning, development, export

promotion and trade regulation in the textile sector. This includes all natural and manmade

cellulosic fibre used to make textiles, clothing and handicrafts. National Textile Policy, 2000

-the policy was introduced for the overall development of the textiles industry. The key areas

of focus include

- Technological upgrades

- Enhancement of productivity

- Quality consciousness

- Strengthening of raw material base

- Product diversification

- Increase in exports and innovative marketing strategies

- Financing arrangements

- Increasing employment opportunities

- Integrated human resource development

National textile policy

The Government of India recently announced the new National Textile Policy (NTP) 2000,

with the objective of facilitating the industry to attain and sustain a pre-eminent global

standing in the manufacture and export of clothing. In furtherance of these objectives, the

strategic thrust is to be placed on technological up gradation, enhancement of productivity

and quality, product diversification, and strengthening the raw material base in the country.

Through NTP 2000, the Government would endeavor to achieve the target of textile and

apparel exports from the present level of U.S. $11 billion to U.S. $50 billion by 2010. Of this,

the share of garments would be U.S. $25 billion’s The policy provides for setting up a

venture capital fund for tapping knowledge-based entrepreneurs and assisting the private

sector to set up specialized financial arrangements to fund the diverse needs of the textile

industry. The new policy would also encourage the private sector to set up world class,

environment-friendly, integrated textile complexes and textile processing units in different

parts of the country and would review and revitalize the working of the TRAs (Textile

Research Associations) to focus research on industry needs.

Present Trade barriers for import / Export Textile Industry

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Trade Tariffs and barriers

1. The General Agreement on Tariffs and Trade (GATT)

2. The Multi Fibre Arrangement (MFA)

3. Tariff barriers for poor countries

4. Phasing out the MFA

5. GATT and the World Trade Organization

Types of Trade Barriers

• Tariffs, quotas, import licenses, fees and paperwork requirements, and customs barriers

that are not uniformly applied.

• Lack of competitive bidding on government tenders.

• Burdensome standards, testing, labeling and certification requirements not required of

domestic manufacturers.

• Direct or indirect subsidies by a foreign government in favor of domestic suppliers.

• Export controls such as license requirements and restricted buyer lists.

• Intellectual property infringement, including copyright, patent and trademarks.

Influence pedaling - company/government interference.

INDIA

Drawbacks and weakness of Indian Textile Industry are as follows -

• Increased global competition in the post 2005 trade regime under WTO

• Imports of cheap textiles from other Asian neighbors

• Use of outdated manufacturing technology

• Poor supply chain management

• Huge unorganized and decentralized sector

• High production cost with respect to other Asian competitors

Tariff Barriers

Tariff levels and Uruguay Round commitments

• In questionnaires, many operators indicated tariffs as the most important obstacle for them

(at least for direct trade). Tariffs for textiles and clothing products subject to the EU/India

market access agreement are progressively reduced during a transition period. However,

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EU operators estimate that their level cannot be overcome (IT, BEL, FR, ES, IRL) for the

time being. Products that can be imported (which are not restricted as consumer goods) are

subject to high customs duties.

• Current rates of products and their basic duty are as follows:

Yarns- 0% to 40%

Fabrics- 25% to 40%

Clothing products- 40%

NON-TARIFFBARRIERS

Registration, documentation and customs procedures

• EU operators complained about excessive customs formalities. Required visas and

documentation is complex. The clearance procedure is time consuming and troublesome.

Wrong classification of products was also reported. They had also complained regarding the

certificate of origin.

1. Visas, documents required for clearance

• According to Customs the following documents are required:

- Commercial invoice, Packing list

Commercial invoice

• The Commercial invoice must be presented in three originals in English. It must contain the

following indication: name of the exporter and the importer, time and place of shipment,

number and date of the Import license, value and CIF cost, detailed description of

merchandises with corresponding numbers of Indian Customs tariff.

• The importer can also be required to provide a Pro Forma invoice in order to obtain a letter

of credit.

Certificate of origin

• The Certificate of origin is not required for EU products (only for products originating in

countries benefiting from a preferential treatment). There are no specific requirements

attached to the certificate of origin to be presented to Customs authorities.

• The Packing list is not compulsory but may facilitate the clearance process

Clearance delays

• Customs authorities gave the following information. Clearance duration is maximum 7 days

but usually takes 2 to 3 days. Very often, longer delays in clearance are due to the importer

(delayed payment of import duties).

69

Minimum import price

• No minimum import price system

Potential for import / export in India / Gujarat Market

Import Export in India

Export

In economics, an export is any good or commodity, transported from one country to another

country in a legitimate fashion, typically for use in trade. Export is an important part of

international trade. Its counterpart is import. Export goods or services are provided to foreign

consumers by domestic producers. Export of commercial quantities of goods normally

requires involvement of the Customs authorities in both the country of export and the country

of import.

The advent of small trades over the internet such as through Amazon, e-Bay and the like,

have largely by-passed the involvement of Customs in many countries due to the law

individual values of these trades. Nonetheless these small exports are still subject to legal

restrictions applied by the country of export, particularly in respect of strategic export

limitations.

A Vision 2010 for textiles formulated by the government after intensive interaction with the

industry and Export Promotion Councils to capitalize on the upbeat mood aims to increase

India's share in world's textile trade from the current 4% to 8% by 2010 and to achieve export

value of US $ 50 billion by 2010.

Import

In economics, an import is any good or commodity, brought into one country from another

country in a legitimate fashion, typically for use in trade. Import goods or services are

provided to domestic consumers by foreign producers. Import of commercial quantities of

goods normally requires involvement of the Customs authorities in both the country of import

and the country of export.

Business Opportunities in future

Innovations is an opportunity

70

New innovations in clothing production, manufacture and design came during the Industrial

Revolution - these new wheels, looms, and spinning processes changed clothing manufacture

forever. There were various stages - from a historical perspective - where the textile industry

evolved from being a domestic small-scale industry, to the status of supremacy it currently

holds. The ‘cottage stage’ was the first stage in its history where textiles were produced on a

domestic basis. During this period cloth was made from materials including wool, flax and

cotton. The material depended on the area where the cloth was being produced, and the time

they were being made. In the latter half of the medieval period in the northern parts of

Europe, cotton came to be regarded as an imported fiber. During the later phases of the 16th

century cotton was grown in the warmer climes of America and Asia. When the Romans

ruled, wool, leather and linen were the materials used for making clothing in Europe, while

flax was the primary material used in the northern parts of Europe.

During this era, excess cloth was bought by the merchants who visited various areas to

procure these left-over pieces. A variety of processes and innovations were implemented for

the purpose of making clothing during this time. These processes were dependent on the

material being used, but there were three basic steps commonly employed in making

clothing. These steps included preparing material fibers for the purpose of spinning, knitting

and weaving.

During the Industrial Revolution, new machines such as spinning wheels and handlooms

came into the picture. Making clothing material quickly became an organized industry - as

compared to the domesticated activity it had been associated with before. A number of new

innovations led to the industrialization of the textile industry in Great Britain. Clothing

manufactured during the Industrial Revolution formed a big part of the exports made by

Great Britain.

Bright Future for Indian Textile Industry

The Indian textile industry roots thousands of years back. After, the European industry

insurrection, Indian textile sector also witnessed considerable development in industrial

aspects. Textile industry plays an important role in the terms of revenue generation in Indian

economy. The significance of the textile industry is also due to its contribution in the

71

industrial production, employment. Currently, it is the second largest employment provider

after agriculture and provides employment to more than 30mn people.

Considering the continual capital investments in the textile industry, the Govt. of India may

extend the Technology Up gradation Fund Scheme (TUFS) by the end of the 11th Five Year

Plan (till 2011-2012), in order to support the industry. Indian textile industry is massively

investing to meet the targeted output of $85bn by the end of 2010, aiming exports of $50bn.

There is huge development foreseen in Indian textile exports from the $17bn attained in

2005-06 to $50bn by 2009-10. The estimation for the exports in the current financial year is

about $19bn. There is substantial potential in Indian exports of technical textiles and home-

textiles, as most European companies want to set up facilities near-by the emerging markets,

such as China and India.

India: Textile Industry - Future Scenario at UDYOG 2008

January 2, 2008

Udyog 2008 will be the largest business exposition in the region, with the participation of

about 500 exhibitors from all over India & foreign exhibitors from China, S. Korea,

Netherlands, Taiwan, UK & Germany. We expect about 50000 business visitors and

delegation from all over India & abroad

Location: VanitaVishram Ground, Surat.

Date: 4th January 2008 to 8th January 2008

Udyog 2008 Exhibition - Overview:

- The Largest Business Exposition in the Region

- An Excellent opportunity to meet new challenges

- Udyog 2008 is supported by key industry players and leading industry association

- With Participation of about 500 Exhibitors from all over India & Foreign exhibitors

from China, S. Korea, Netherland, Taiwan, UK & Germany.

Expect about 50000 business visitors and delegation from all over India & abroad during five

days.

Opportunities with nation and policies.

72

Rationalize excise duty structure across the entire value chain from fibre to

garmentretailing76. Levying of moderate, uniform VAT should be the long-term objective.

- Do away with exemptions on ginned cotton, hank yarn77, grey fabric, hand

processors (and a few specified processes), knitwear and hosiery and SSI units

ingarments78.

- Rationalize excise duty incidence at spinning stage. Spinning bears almost 55% of

total excise revenue collections from this industry, but contributes only 39% to value

addition79.

- Abolish Additional Excise Duty (Textile and Textile Articles)- AED (T&TA) on

mmf/yarn and cotton yarn

These would go a long way in realignment of the industry structure at all stages, since the

structure of the textile sector particularly has been the result of distortionary and

discriminatory excise policy, replete with exemptions. New industry structure based on

market forces would be more attractive for productive investments, thereby raising the

technological standards and quality levels of the entire industry.

Conclusion and Suggestions

- Textile Industry is one of India’s largest industries, after agriculture. It provides direct

employment to about 350 Lacs people.

- It accounts for 14% of the total Industrial production, contributes to nearly 30% of the

total exports and is the second largest employment generator after agriculture.

- we have to keep in mind that India-Israel had recognized each other for a long time but

there was no diplomatic relation for a long time, so there was plenty of catching up to be

done. So the growing India-Israel relationship has been there, but they should not have a

change in our dialogue or our relationship with Palestine and I do not think that there is a

change.

- We have a representative in the Palestinian territories and now that we are also member

of the UN Security Council, our views are welcome by all the Arab counties and the

Israelis also. So, therefore, what I can say is that India’s position perhaps has become a

little bit more normal because now we are able to interact with the Palestinians, with the

Arab countries as well as Israel.

73

- Despite the cooling relationship after 2004, the evolving bilateral relations between India

and Israel, particularly their military cooperation, can be described as pragmatic,

centering on their convergent strategic interests.

- Indian textile and clothing sectors have a tremendous potential, only a portion of which

has been exploited due to policy constraints. And where exploited, Indian entrepreneurs

have done the country proud. However, there lies a considerable potential that has not

been exploited primarily due to government policy marked by ad hocism, fragmented

vision, and political opportunism.

- India is a land of great potential since it is perhaps the only country in the world that is

self-sufficient and complete in the cotton value chain. This strong advantage, however,

has been frittered away due to fragmented and myopic vision of the government that

resulted in policies that ran counter to market signals.

- Allow Foreign Direct Investment (FDI) in garment retailing to enable large, modern

Retail showrooms to set up shops in India. Owing to comparative advantages in clothing

manufacture that would be available indigenously, the government need not worry if

these large retailers would begin to outsource their clothing requirements. Presence of

large retailers would create domestic demand for ready-to-wear garments, and also push

for higher productivity in garment manufacturing through bulk orders.

- This would also help promote large-scale manufacturing facilities for garmenting, and

help Indian exports diversify into standardized, mass-clothing items.

Through the 2020s and 2030s, these updates would help the relationship grow in new

fields, encouraging deeper cooperation in the research and innovation-based industries

central to both countries’ future growth, employment and security needs. And they would

build upon the initial success of the QIZ program in creating ties of mutual interest and

shared benefit among Israel and its peace partners.

74

: A study of Pharmaceutical Industry: INTRODUCTION OF THE ISRAEL PHARMACEUTICAL INDUSTRY

There was no pharmaceutical industry until the early 1930s, although there were pharmacies

where medicines were prepared from local and imported raw materials. Throughout the

1920s, many people complained that imported medicines were overpriced. The rhetoric was

all about economy. Physicians, pharmacists and the general public wanted cheaper

alternatives. In the early 1930s, immigrants from central Europe, mostly from Germany,

began making their way to Israel. These immigrants ended up planting the seeds of a different

ethos, that of a modern industrial society. Israel’s unstable economy made importing

medicines impossible, and the local pharmaceutical industry profited from the need for

modern drugs. The leaders of the industry had a vision: a selfsufficient Israeli pharmaceutical

industry.

FACTS AND FIGURES

In 2001, drugs used in Israel amounted to US$675 million (ex-factory). This amount

represents 13% of the national health expenditure. Of this amount, 60% is spent on imported

drugs, particularly those protected by patents.

Purchases of drugs by Israeli customers are distributed as follows:

• 68% by the four health funds;

• 20% by the private pharmacies (these 20% mostly represent over-the-counter (OTC) and

‘out of pocket’ drugs);

• 9% by the Palestinian authorities; and

• 3% hospitals.

The local production of drugs reached the amount of US$1.25 billion, most of it generics for

export purposes.14

ROLE OF THE PHARMACEUTICAL MARKET IN ISRAEL ECONOMY

The Israeli healthcare sector is one of the strongest in the Middle East. Israel is the most

developed nation in the Middle East in terms of both its healthcare system and

pharmaceutical market

14 http://www.touchbriefings.com/pdf/17/pt031_r_8_blay.pdf

75

Pharmaceutical giant, Teva, continues to flourish in Israel. On a global scale, in QIII 2011,

Teva completed the acquisition of all of the outstanding shares of Cephalon for US$81.5 per

share in cash, or a total enterprise value of approximately US$6.8 billion.

Israel offers first-rate R&D facilities and continues to enhance its burgeoning reputation in

the field of biotechnology, and this has not gone unnoticed.

STRUCTURE OF THE PHARMACEUTICAL INDUSTRY

(1) Blockbuster Drugs

A blockbuster drug is defined as a drug generating more than $1 billion a year, and

blockbuster drugs account for roughly one-third of the value in pharmaceutical sales. These

drugs include Lipitor and Celebrex by Pfizer and Prilosec and Nexium by AstraZeneca,

which combine for more than $19 billion in sales alone.

(2) Patents, Generics and Blockbuster Drugs

The structure of the industry is currently designed so that pharmaceutical companies can

market their products to different nations at different prices. In the U.S., unsurprisingly,

people pay much higher prices for brand medication than do those in other countries. As a

result, America has seen an increase in the illegal smuggling of pills from Canada to the

United States. This is especially prevalent for on-brand, expensive drugs (such as Lipitor by

Pfizer, which can be 40 percent cheaper in Canada).

(3) Considerations

Pharmaceutical companies may soon evolve in a different direction, thanks to developments

in stem-cell research and other biotechnology. Possibly in the future, Big Pharma will be less

concerned about the patents for their blockbuster drugs and more concerned about being able

to manufacture and produce individualized products for specific patients. This trend may start

sooner rather than later, considering that several blockbuster drug patents (such as Nexium

and Lipitor) are due to expire soon. Upon expiration, it is highly likely that generic versions

from places abroad (especially India) will undermine the profitability of these blockbusters.15

BUSINESS ACTIVITIES OF PHARMACEUTICAL INDUSTRY

1. Discovery/Research

2. Chemistry and Manufacturing Controls (CMC) Development

15 http://www.ehow.com/about_5558983_structure-pharmaceutical-industry.html

76

3. Pre Clinical Testing

4. Clinical Trials

5. Regulatory Approval and Marketing

6. Production and Distribution

7. Post Marketing Surveillance

Comparative Position of Israel’s Pharmaceutical Industry with India’s Pharmaceutical

Industry

Comparison can be done on various basis such as Contribution of the sector to Country’s

GDP, Type of products the company is producing, Types of Products the country is

importing/exporting, market segment the country is dealing in and so on.

Let’s first take a look at the economy of both countries:

• GDP of Both Countries:

Source: Http://www.gfmag.com The above chart shows the GDP of both the countries. The GDP of Israel is US$ 0.234

Trillion which approximately is equal to14% of our total GDP.

• Real GDP Growth:

India

77

16 Israel

17 The above data clearly shows the difference between India’s GDP Growth and Israel’s GDP

Growth. It clearly shows that there is 6% difference between both the growth rates.

• Composition of GDP by Sector:

India

Israel

18

The above figure shows the composition of GDP by sectors i.e. Agriculture, Industry &

Services. The share of agriculture is higher in India as compared to Industry, while in Israel

the share of industry is higher as compared to the share of agriculture in the GDP.

• World Ranking:

Now let’s take a look at the ranking of both the countries from GDP point of view as well as

from pharmaceutical industry point of view.

16 http://www.gfmag.com 17 http://www.gfmag.com 18 http://www.gfmag.com

78

The following is the ranking of both the countries from GDP point of view:

19

India stands on 9th rank with US$ 1,832,222 million GDP while Israel stands on 39th rank

with US$ 217,333 million GDP.

The following is the ranking of both the countries from GDP point of view:

Indian Pharmaceutical industry ranks 3rd in the world in terms of volume and ranks 14th in

terms of value.

Israel Pharmaceutical industry ranks approximately 9th in the world in terms of volume and

ranks 20th in terms of value.

• Major Pharmaceutical Companies:

Now let’s take a look at the major players of pharmaceutical industry in both countries.

INDIA Following are some of the major pharmaceutical companies of India

1. Cipla

2. Ranbaxy Lab

3. Dr Reddy’s Lab

4. Sun Pharma

5. Lupin Ltd.

6. Aurobindo Pharma 19 http://www.worldbank.org

79

7. Piramal Health

8. Cadila Health

9. Matrix Labs

10. Wokhardt

ISRAEL Following are some of the major pharmaceutical companies of Israel

1. Teva Pharmaceutical Industries

2. Taro

3. Perrigo (Agis Industries)

4. Dexcel

5. Trima

6. Rekah

7. Pfizer

8. GlaxoSmithKline

9. Novartis

10. Sanofi-Aventis

• Pharmaceutical Exports & it’s Growth:

80

20 In the month of January 2010, exports have grown in India by 5.9% to US$ 9.1 Billion

compared to US$ 8.6 Billion in Jan 2009.

For Israel in the month of January 2010, exports have grown approximately by 47% to US$

6.0588 Billion compared to Rs US$ 4.0851 Billion in Jan 2009.

• Government Expenditure on Health:

INDIA

The government of India spends US$ 4.5 Billion for health of the population.

ISRAEL

The government of Israel spends US$ 37.26 Billion for health of the population.21

As far as the comparison goes India is way ahead of Israel in terms of pharmaceutical

industry. Still Israel is having a valuable pharmaceutical industry. The main power of Israel’s

pharmaceutical industry is TEVA Pharmaceuticals Ltd. Teva is the largest API producer of

Israel and the same ranks 11th among the world’s largest companies. Apart from this Israel

exports medicines to over 120 countries in the world. Israel offers first rate R&D facilities

and continues to enhance its burgeoning reputation in the field of biotechnology. Teva has a

biotechnology R&D site in Israel, and is currently undertaking further study with a biosimilar

drug. In March 2011, XTL Biopharmaceuticals announced it was to acquire a private

biotechnology company, while in August 2010, XTL completed the acquisition of an Israeli

biologic company.

Present Position and trend of Business with India during Last 3-5 years

Israel and India position in Pharmaceutical products exports in world

20 http://www.mfa.gov.il/NR/rdonlyres/3345CCFB-8995-4CD9-891E-8FFA61EC2ABE/0/israelfigures2011.pdf http://www.cci.in/pdf/surveys_reports/indias_pharmaceutical_industry.pdf 21 http://www.mfa.gov.il/NR/rdonlyres/3345CCFB-8995-4CD9-891E-8FFA61EC2ABE/0/israelfigures2011.pdf http://www.cci.in/pdf/surveys_reports/indias_pharmaceutical_industry.pdf

81

Interpretation: In the world EU countries is no.1 in pharmaceutical export.USA is

2ndno.India is 8th rank and Israel is 10th position in value and share.22

Israel Products selling in India

Product name Therapeutic category New/Commercial

AtracuriumBesilate NEUROMUSCULAR BLOCKERS

Commercial

AtomoxetineHCl CNS New

BeclomethasoneDipropionate RESPIRATORY SYSTEM Commercial

Bivalirudin CARDIOVASCULAR New

22 www.wto.org/pharmaceutical

82

BleomycinSulfate ANTINEOPLASTIC Commercial

Cabergoline ANTI-PARKINSON Commercial

Carbidopa ANTI-PARKINSON Commercial

Clarithromycin ANTIBACTERIALS Commercial

Cyclosporine IMMUNOMODULATORS Commercial

Fluorometholone OPHTALMOLOGICAL Commercial

Methylprednisolone Sodium Sucinate

CORTICOSTEROIDS Commercial

Silymarin ANTI-POISONING AND OVERDOSE

Commercial

Gabapentin ANTIEPILEPTIC Commercial

23

India’s Exports

Export performance of the Indian pharmaceutical sector is also impressive. The sector is

one of the top export items from India accounting for more than 4% of India’s total

exports in 2006-07. Exports, which constitute around 50% of the industry’s total

production, have grown at a CAGR of 14% in the last decade. Major export markets

include highly regulated markets such as USA, Germany, United Kingdom and Canada.

Top 10 destination countries for India’s pharmaceuticalexports amounted to over 40

percent of India’s total pharmaceutical exports.

23 http://www.tapi.com/Public/Pages/Product-List.aspx

83

Policies and Norms of India for Import or export to the Israel

Legal Framework for Foreign Trade of India In India, the legal framework for the regulation of foreign trade is mainly provided by the

Foreign Trade (Development and Regulation) Act, 1992, Garments Export Entitle-meant

Policy: 2000-2004, Export (Quality Control and Inspection) Act, 1963, Customs and Central

Excise Duties Drawback Rules, 1995, Foreign Exchange Management Act, 1999 --and the

Customs and Central Excise Regulations. Government control import of non-essential items

through an import policy.At the same time, all-out efforts are made to promote exports.

Exports should be promoted in such a manner that the economy of the country is not affected

by unregulated exports of items specially needed within the country. Export control is,

therefore, exercised in respect of a limited number of items whose supply position demands

that their exports should be regulated

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The government of India announced sweeping changes in the trade policy during the year

1991. As a result, the new Export-Import policy came into force from April I, 1992. This was

an important step towards the economic reforms of India. IN order to bring stability and

continuity, the policy was made for the duration of 5 years.

India Israel trade: India and Israel will further expand bilateral trade and investment relations building on the

respective strengths of the two economies. development of bilateral relations between the two

countries and said this was in continuation of the process started by the Israeli Prime Minister

Mr. Ehud Olmert’s visit to India

Several steps have since been implemented including the opening up of an Indian bank in

Israel, finalization of an Agreement on Standardization and initiation of discussions between

the two sides for a Preferential Trade Agreement (PTA), based on the recommendations of

the Joint Study Group. A Cooperation Agreement between India and Israel in the field of

Standards, Technical Regulations and Sanitary Measures is also under consideration, under

which both sides could cooperate in this field through harmonisation of national standards

Trade between India and Israel stood at US $ 2.2 billion in 2005-06, of which India’s

exports to Israel were valued at US $ 1.2 billion and India’s imports from Israel at US $ 1

billion. During 2004-05, India’s exports to Israel crossed US $ 1 billion, registering a growth

of nearly 39%24.

Top 5 items of exports from India to Israel are: Gems & Jewellery, drugs, pharmaceuticals &

fine chemicals, cotton yarn, fabrics, made-ups etc., plastic & linoleum products,

inorganic/organic/agro-chemicals etc. Top 5 items of imports by India from Israel

include: Pearls, precious / semi-precious stones; electronic goods, fertilisers manufactured,

professional instruments etc., except electronic and organic chemicals.There is considerable

scope in sectors other than diamonds and cotton, especially organic chemicals, plastics and

rubber, electrical component, software, pharmaceuticals and medical disposable metals and

machineryetc.

24commerce.nic.in/press release

85

Since establishment of diplomatic relations in 1992, bilateral trade and economic relations

have progressed rapidly. From a base of US$ 200 million in 1992 (comprising primarily of

diamonds), merchandise trade has diversified and reached US$ 5.15 billion in 201125.

In 2011, India was the 8th largest trade partner of Israel in the world, and 3rd largest trade

partner in Asia following China and Hong Kong. India is the 5thlargest export destination of

Israel (including diamonds) and 7th largest excluding diamonds (Jan-Dec 2011). India-Israel

two-way trade in 2011 increased by 8.8% from US$ 4.73 billion in January-December 2010

to US$5.15 billion in January-December 2011. However balance of trade was in Israel’s

favor by US$844 million. Although India’s exports to Israel in areas other than diamonds

increased over the years, diamonds continue to be an important segment at 56.4% of total

bilateral trade in 2011 (US$ 2.91 billion out of US$ 5.153 billion).

While the traditional business thrust in diamonds, agriculture, chemicals, information &

communication technology and pharmaceuticals remained strong, there is a growing interest

from Israeli companies in clean energy, water technologies, biotech, nanotech, homeland

security, real estate, infrastructure and financial services.

Since the establishment of diplomatic relations in 1992, several agreements were signed

between Israel and India including the following:

1. Agreement for Promotion and Protection of Investments (Jan 1996)

2. Bilateral Agreement regarding Mutual Assistance and Cooperation in Customs Matters (1996)

3. Agreement on Cooperation in Peace Uses of Outer Space (2002) 4. Agreement for Cooperation in the field of Protection of the Environment (2003) 5. MOU on India-Israel Research and Development Fund Initiative (2005) 6. Agriculture Work Plan (2006)

Free Trade Agreement: A Free Trade Agreement is currently under negotiations between the two countries.

Present trade barriers for import and export of Pharmaceutical goods in Israel

TARIFF BARRIERS

INVESTMENT BARRIERS

REGULATORY BODY

SERVICES BARRIERS

INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION

25exportimportindia.in/search/exim-policy-of-india-2011

86

NON-TARIFF BARRIERS

GOVERNMENT PROCUREMENT

STANDARDS, TESTING, LABELING, AND CERTIFICATION26

Potential Exports/Foreign Sales

International research based firms invest $80M per annum in clinical trials conductedby

Israeli medical institutions and physicians. If parallel importation of patented pharmaceutical

products were to be implemented, many of these research initiatives could be moved out of

Israel In sum, parallel importation brings with it the attendant risk of significant job losses in

Israeli PHARMA members, curtailed participation by Israeli doctors and scientists in clinical

trials, and reduced incentives for new biotech investment by foreign firms.27

India-Israel Economic Relations: A Vision for the Future

Indian Pharma sector is amongst the fastest growing in the world today. A number of Israeli

Pharma companies have established their presence in India. This sector offers vast

opportunities for investments and collaborations, including in equipment manufacturing,

R&D, and medicine development.

Israel Pharma's Future Depends on These Three Trends

Israel's Pharmaceutical companies have managed their business in much the same

way for decades. But significant changes in government regulations, market conditions, and

technology will force the industry to look for new business models and practices. Companies

that don't adapt face an uncertain and unsettling future.

From my viewpoint, the industry's future success depends on how it handles the following

three trends:

Increasing Role of Generics

A record number of patents are expected to expire in the next few years. As soon as a

drug goes off patent, generics force drug prices to drop by almost 85 percent. Israel's

Pharmaceutical companies have responded to the generic threat in several ways.

26 http://www.ustr.gov/sites/default/files/uploads/reports/2009/NTE/asset_upload_file297_15480.pdf 27 http://www.cptech.org/ip/health/phrma/nte-99/israel.html

87

Perhaps the most promising approach is drug companies getting into "branded

generics" themselves. These branded versions of their original drugs sell for higher prices

than unbranded generic equivalents but are less expensive than the true branded product.

Conclusion

Though India’s Industrial contribution to the GDP is lower than Israel’s industrial sector’s

contribution, India’s pharmaceutical industry is ahead of Israel’s pharmaceutical industry.

May it be export, sales, revenue etc.

Israel still holds a major advantage in form of a company i.e. Teva Pharmaceuticals Ltd. Teva

is one of the largest companies globally. It ranks approximately 11th in the list of major global

pharmaceutical companies.Israel offers first rate R&D facilities and continues to enhance its

burgeoning reputation in the field of biotechnology.

Teva has a biotechnology R&D site in Israel, and is currently undertaking further study with

a biosimilar drug. In March 2011, XTL Biopharmaceuticals announced it was to acquire a

private biotechnology company, while in August 2010, XTL completed the acquisition of an

Israeli biologic company.

The following are the key strength of Indian pharmaceutical sector which makes it ahead of

Israel’s pharmaceutical sector:

• Low cost of innovation/Manufacturing/Capex costs/expenditure to run a cGMP

compliance facility.

• Low cost scientific pool on shop floor leading to high quality documentation.

• Proven track record in design of high tech manufacturing facilities.

• Excellent regulatory compliance capabilities for operating these assets.

• Recent success track record in circumventing API/formulation patents.

• About 95 per cent of the domestic requirement being met through domestic

production.

• India is regarded as a high-quality and skilled producer in the world.

• It is not only an API and formulation manufacturing base, but also as an emerging hub

for: Contract research. Bio-technology, Clinical trials and Clinical data

management.

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: A study Agro-Technology industry:

INTRODUCTION OF AGRICULTURE SECTOR IN ISRAEL

Agriculture in Israel is a highly developed industry. Israel is a major exporter of fresh

produce and a world-leader in agricultural technologies despite the fact that the geography of

Israel is not naturally conducive to agriculture. More than half of the land area is desert, and

the climate and lack of water resources do not favour farming. Only 20% of the land area is

naturally arable. Israel produces almost 70% of all its food requirements. It imports

agricultural produce valued at around $ 600million while it export is around $800 million per

annum. Agricultural inputs produced in Israel are valued today at over $2 billion, of which

70% are exported.28

Since independence in 1948, the total area under cultivation increased from 408,000 acres

(1,650 km2) to 1,070,000 acres (4,300 km2), while the number of agricultural communities

increased from 400 to 725. Agricultural production has expanded 16 times, three times more

than population growth. Water shortage is a major problem in Israel. Annual renewable water

resources are about 5.6 billion cubic feet (160,000,000 m3), of which 75% of which is used

for agriculture.

Israel is able to grow a wide range of crops. Field crops grown in the country include wheat,

sorghum and corn. Fruit and vegetables grown include citrus, avocados, kiwifruit, guavas and

mangoes from orchards located on the Mediterranean coastal plain. Tomatoes, cucumbers,

peppers and zucchini are grown commonly throughout the country. More than forty types of

fruit are grown in Israel. In addition to citrus, these include avocados, bananas, apples,

cherries, plums, nectarines, grapes, dates, strawberries, prickly pear (tzabba), persimmon,

loquat (shesek) and pomegranates. The flowers grown most commonly are Chamelaucium

(waxflower), followed by roses, which are grown on 214 hectares of land. In addition to

flowers favoured in the West such as lilies, roses and tulips It has become a major player in

the global floral industry, especially as a supplier of traditional European flowers during the

winter months.29

28 Introduction of Agriculture sector in Israel retrieved from http://www.israelmybeloved.com/channel/israel_today/section/commerce_industry

29 http://india.gov.in/sectors/agriculture/ministry_agriculture.php on 18.01.2012

89

ROLE OF TECHNOLOGY IN AGRICULTURE SECTOR OF ISRAEL

Research and development success lies in the two-way flow of information between research

personnel and farmers. Through a network of extension services (and active farmers'

involvement in all R&D stages), problems in the field are brought directly to the researcher

for solutions, and scientific results are quickly transmitted to the field for trial, adaptation and

implementation. In the past 30 years agricultural output has increased almost fivefold with

hardly any increase in the amount of water used. This reflects technological advances of

different types - water efficiency went up by about 30% and crops with higher yields and

market-value were introduced. To reduce water consumption for agriculture, advanced water-

saving techniques (notably the drip system) were applied, which direct the water flow straight

to the root zone of plants. Also, computerized irrigation systems were used. Israeli engineers

and agriculturalists created the revolutionary drip irrigation system, which has reduced water

consumption by 50-70 percent. Greenhouses systems, including specialized plastic films, and

heating, ventilation and structure systems, enable Israeli farmers to grow more than three

million roses per hectare per season.30

Disease resistant seed varieties that are durable in storage and are suitable to a variety of

climatic conditions are under constant development at Israel’s research institute and at private

companies. Intensive experimentation on the drawing board and in the field has resulted, inter

alia, in the development of heavy-duty soil preparation machinery; advanced tillage, planting,

harvesting and transplanting equipment adaptable to intensive farming; and diverse irrigation

systems, ranging from sprinklers to computerized drip irrigation. Automated milking and

dairy herd management systems and egg-collecting equipment, computerized feeding systems

and production-recording computers have been introduced, as well as machinery for the

grading, packing, storing and transporting of produce.

31One of the remarkable developments is the application of fertilizers through drip irrigation

buried in the ground in order to ensure that less mobile components, such as phosphorous,

30Role of technologyy in agriculture sector in Israel retrieved from http://en.wikipedia.org/wiki/Science_and_technology_in_Israel

31 http://www.agricultureinformation.com/mag/2006/06/israel-agriculturerole-model-for-india/ on 18.01.2012

90

will reach the roots directly. Slow release fertilizers allow better exploitation of the fertilizer

and less groundwater pollution. Israeli companies manufacture and export pesticides and

herbicides for the control of insects, fungi and weeds. Growing awareness regarding

environmental protection, biological materials which are non-pathogenic to both plants and

humans have been developed for treating diseases in plants. Israeli agro technology

companies join forces and supply turnkey projects for both crop and livestock development

programs there is a shift from extensively-farmed, mass-produced crops to intensive growing

of niche products based on scientific and technological R&D, such as hybrid, virus-resistant

tomatoes or tissue-culture propagated banana-tree saplings.

STRUCTURE, FUNCTIONS AND BUSINESS ACTIVITIES OF AGRICULTURE

SECTOR IN ISRAEL

The co-operative structure in Israel is basically organized at two levels: The local village

level constituted by the individual members and the regional level constituted by the first-

level co-operative villages. A moshav is a farming community in which all farms are family-

operated and all farmers are members of a democratically run multipurpose village

cooperative. In principle, the co-operative service association in the moshav purchased all

farm supplies for its members and marketed their farm product. Kibbutz is a commune.

Members work together as in a production co-operative and receive from the Kibbutz all their

daily needs like food, housing, health-care, education and clothing.

MASHAV‟s concentrates on introducing effective support systems to enhance the economic

viability of agriculture in areas such as marketing, storage and transport, the supply of

agricultural inputs, granting of credit and finance to the agricultural sector and upgrading the

work of extension services. MASHAV‟s agricultural activities focus on Israeli areas of

expertise such as semi- and arid-zone agriculture, combat of desertification, irrigation and

water management, high-yield agriculture, dairy farming and agricultural and agri-business

strategies for the small farmers.32

32Structure and Business Activities of Agriculture sector retrieved from

http://mashav.mfa.gov.il/mfm/Data/50137.pdf on 21.01.2012

91

33Agricultural projects that MASHAV operates in partner countries are:

Family-Farm Food Security

Core Demonstration Programs combined with Small-Holder Out-Grower Extension

Demonstration of Better Environmental Practices

Integrated Technology-Based Agribusiness Enterprise Development

Agri-business Consultancy and Technical Services

Specialized Agricultural Branch Development

AGRICULTURE IN INDIA

India’s record of progress in agriculture over the past four decades has been quite impressive.

The agriculture sector has been successful in keeping pace with rising demand for food. The

success of India’s agriculture is attributed to a series of steps that led to availability of farm

technologies which brought about dramatic increases in productivity in 70s and 80s often

described as the Green Revolution era. It represents the largest sector producing around 28

percent of the GDP, is the largest employer providing more than 60 percent of the jobs and is

the prime arbiter of living standards for seventy percent of India’s population living in the

rural areas. Indian agriculture has progressed a long way from an era of frequent droughts and

vulnerability to food shortages to becoming a significant exporter of agricultural

commodities. Indian agriculture, which grew at the rate of about 1 percent per annum during

the fifty years before independence, has grown at the rate of about 3 percent per annum in the

post independence era.34

35Indian agriculture broadly consists of four sub-sectors. There are oil seeds, fiber, plantation

crops and fruits and vegetables. The rapid growth in this sub-sector through exploitation of

wastelands and fallows, spread of irrigation and adoption of production enhancing

technologies was critical in transforming India from a country vulnerable to food shortages to

one of exportable surplu

33 http://www.jewishvirtuallibrary.org/jsource/Society_&_Culture/kibbutz.html on 23.01.2012 34Agriculture sector in India retrieved from http://india.gov.in/sectors/agriculture/index.php on 25.01.2012

35 http://www.mapsofindia.com/indiaagriculture/ on 27.01.2012

92

Increased outputs have been achieved chiefly by adopting, since mid sixties, a strategy aimed

at increasing food grains production by concentrating public sector efforts and resources in

regions with a high potential for quick and substantial productivity gains through increased

cropping intensity and average yields. These were the areas favoured by agro climatic

resource conditions and where irrigation facilities already existed or could be developed

relatively rapidly. The main elements of this strategy were: (i) expansion of irrigation

coverage, (ii) increased provision and utilization of key inputs – mainly high yielding

varieties (HYVs) of crops, mainly of wheat and rice and chemical fertilizers and plant

protection chemicals, (iii) expansion and improvement of institutional support services such

as research and extension and (iv) price policies favorable to producers of major food grains.

The success of this strategy was made possible by development and availability of replicable

production technology packages, so called ‘Green Revolution’ technologies.Irrigation

facilitated double cropping and widespread adoption of HYVs. Irrigation development was

the cornerstone of the strategy. Undivided India was amongst the largest irrigated areas in

the world.

Development of irrigation facilities

Table 1: Land under irrigation facilities

years Growth rate

1950-51 7.2 million hectors

1965-66 9.8 million hectors

1970-71 4.5 million hectors

1980-81 9.5 million hectors

1990-91 14.3 million hectors

Source: http://agricoop.nic.in/

Fertilizers have constituted yet another key input in addition to expanded irrigation and

spread of HYVs in achieving goals of high production and productivity. India currently

occupies third position in the world, after China and USA, in terms of fertilizer production

93

and consumption. According to some current projections, fertilizer’s use will need to increase

to 30-35 million tonnes to meet the food grains need of 2020.36

Most agricultural development programmes initiated in 1960s were concentrated in regions

of high potential. Thus five states, Punjab, Haryana, Uttar Pradesh, Andhra Pradesh and

Tamil Nadu account for 50 percent of the country’s net irrigated and 53 percent of the gross

irrigated area. Agricultural production and income rose substantially in the north-western

states of Punjab, Haryana, and Western Uttar Pradesh, parts of Rajasthan, Tamil Nadu and

Andhra Pradesh. By contrast productivity and output growth have been modest in eastern

and central India and in Deccan plateau. An important impact of the strategies pursued in the

‘Green Revolution’ period has been intensification of regional disparities and imbalances in

agricultural development and food availability and hence levels of food security.

Increase in food grain production

Table 2: Growth rate in food grain production

years Growth rate

1950 3.22

1960 1.72

1970 2.08

1980 3.5

1990 3.4

Source: http://unitedwithisrael.com/pdf/agriculture.pdf

The Government of India has been earnestly trying to put into operation different plans to

increase investment or outlay in merchandizing and commercializing. Some of the known

plans and strategies of the Indian Government include the construction of rural godowns,

market research and information network, grading and standardization,

development/strengthening of agricultural marketing infrastructure. The Indian Agricultural

Research Institute (IARI) was set up in the year 1905. The Indian Agricultural Statistics

36Agriculture sector in India retrieved from http://en.wikipedia.org/wiki/Agriculture_in_India on 26.01.2012

94

Research Institute formulates new methods for the planning of agricultural testing. Of late,

the Government of India has established Farmers Commission to fully assess the cultivation

plan. Nonetheless, the suggestions received varied responses.

PRESENT POSITION AND TREND OF BUSINESS WITH INDIA AND GUJARAT

37India is Israel’s second-largest trading partner after the United States. Bilateral trade has

blossomed from just $80 million in 1991 to about $5 billion in 2010. India-Israel relations

continue to develop strongly in several areas; including agriculture, trade, water resources

and cutting-edge technologies. Israeli co-operation with India in the field of agriculture is

growing both through government-sponsored initiatives and private business deals

Since 1998, Israel has sponsored a $2 million horticultural demonstration farm at the Indian

Agricultural Research Institute at Pusa, New Delhi. In 2006, an Agricultural Cooperation

Agreement was signed between the Israeli and Indian Ministers of Agriculture initiating a

long-term cooperation program implemented in India under the supervision of a MASHAV

agricultural expert sent to the region. In 2008, Israel and India signed a Memorandum of

Understanding in the field of agriculture, establishing six centers of excellence covering

production of vegetables and fruit using ultra-modern technologies in Haryana and

Maharashtra. In December 2010, Israel and India agreed to expand the scope of ongoing joint

research and development ventures in the field of agro-tech industries, irrigation and water

management. Also in December 2010 it was reported that Israeli experts on the cultivation of

mangoes were advising India's State Horticulture Department. In January 2011, the first Indo-

Israel Centre of Excellence for vegetables was inaugurated in Gharaunda town, Haryana.

38Several major Israeli companies in the field of agricultural have established Indian

subsidiaries and long-term projects with Indian business partners. Netafim, the world’s

largest micro-irrigation company, based in Tel Aviv, established a subsidiary, Netafim

Irrigation India, in 1997, with headquarters in Vadodara, Gujarat. . In 2008, Netafim opened a

second factory in the southern Indian city of Chennai, making India the only nation to have

37 India –Israel Cooperation in Agriculture sector retrieved from http://www.indembassy.co.il/Bilateral%20Trade%20Relations.htm On 2.02.2012

38 http://www.agricultureinformation.com/mag/2006/06/israel-agriculturerole-model-for-india/

on 4.02.2012

95

more than one Netafim factory outside of Israel. Netafim also bases its global engineering

and planning in India, although it remains an Israeli company.

Another Indo-Israel irrigation giant is Naan Dan Jain. The parent company, Jain Irrigation

Systems, controls more than 60% of the Indian irrigation market, and is responsible for

revolutionizing the Indian agricultural sector through advanced and economical irrigation

technologies.

Plastro Plasson Industries (India) Ltd. is an Indo-Israel joint venture company, established

in 1992. The company specializes in micro irrigation. PPIL offers a wide range of products it

includes drip and micro irrigation systems and turnkey projects for all agriculture sectors

such as row crops, horticulture, green houses, plantations, orchards, nurseries and more. The

manufacturing unit is situated at Urse, near Pune.

POLICIES AND NORMS OF ISRAEL AGRO TECHNOLOGY 39Israel's tariff classification is based on the Harmonized System (HS) Code. Israel’s Customs

and Purchase Tax Tariff is the main instrument used for the classification of goods. Customs

may also require a sample of the material/product, lab testing results, authorizations from

institutes/authorized government agencies, import license and any other documents as

required by the specific Customs Department. Imported agricultural and food products must

carry a health certificate or an import license for veterinary, phytosanitary or public health

reasons. The Israel Veterinary Services (IVS), the Plant Protection and Inspection Services

(PPIS) and the Food Control Service (FCS) of the Ministry of Health issue these,

respectively.

Israel has strict marking and labelling requirements that frequently differ from those of other

countries. U.S. exporters should consult with their Israeli importer prior to shipping any

product that will be offered to the local market. At present, some labelling and marking

requests from the Ministry of Health have been inconsistent.

All imports into Israel must have a label indicating the country of origin, the name and

address of the producer, the name and address of the Israeli importer, the contents, and the

weight or volume in metric units. In all instances, Hebrew must be used; English may be

39 Policies for Agro technology in Israel retrieved from

http://www.oecd.org/dataoecd/53/0/45189389.pdf on 5.02.2012

96

added provided the printed letters are no larger than those in Hebrew. Nutritional labeling is

compulsory on all packaged foods.

Marking should be done by printing, engraving, stamping, or any other means, on the

package or the goods themselves.

Israel maintains restrictions on imports of products the government considers to be

economically sensitive and subject to agricultural policy considerations. U.S. meat exports

face an especially difficult environment due to a ban on beef meat due to veterinary

restrictions and for kosher requirements.

For manufacturing imports from other sources, the overall tariff protection is moderate

(simple average, including ad valorem equivalents of 6.6% for non-food products and 8.2%

for electronic products except for food, beverages, clothing and footwear industries which

face relatively high tariffs). In this context it is interesting to note that seems to be a negative

relationship between the degree of tariff protection and the industries’ performance. The high

performing high-tech industries tend to have lower than average tariff protection, whereas the

slow growing traditional industries tend to be protected by higher than average tariffs.

40An overall general analysis of the export industry of agricultural products in Israel shows

that the volumes are growing, the volume of exports of processed agricultural processed

products is declining, and imports over exports stand at a ratio of seven in value and at fifty

in quantities. This is due to the Treaties and Agreements Israel had entered into covering its

trade with the outside world. Such developments of paramount importance were the WTO

Membership extended to Israel in 1995 as well as the Association Agreement with the EU

that opened the doors wide open to imports of agricultural products – and others – from

various other countries.

An important part of Israeli exports of agriculture-related goods is also that of the trade in

agricultural inputs in which Israel has managed to create and sustain an advantage worldwide.

It is the direct product of a conscious support policy by the Government over many years and

40 Policies for Agro-technology in Israel retrieved from http://www.oecd-ilibrary.org/agriculture-and-food/agricultural-policy-monitoring-and-evaluation-2011/israel_agr_pol-2011-13-en on 7.02.2012

27

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careful planning due to the collaboration of various stakeholders, i.e. researchers, extension

workers, farmers and agriculture-related industries. Israel’s agricultural sector is

characterized by an intensive system of production stemming from the need to overcome the

scarcity in natural resources, particularly water and arable land. The constant growth in

agricultural production (both inputs and outputs) is due to the close cooperation of the above-

mentioned stakeholders. These four factors develop and apply new methods in all agricultural

branches. The result is modern agriculture in a country where more than half of its area is

desert. The close collaboration between the research and development and the industry led to

the development of a market-oriented agribusiness that exports agro-technology solutions

worldwide.

Beyond favorable tax treatment to farmers who opt to reside and work either at the various

Kibbutz and Moshav settlements around the country, most other tax measures and discounts

come in the form of subsidies and grants.

Agricultural research in Israel is a nationally accepted mission and thus, significant long term

effort and funds are diverted to it for many years. With such little arable land, scarce water

resources, an increasing population and a permanent political problem that goes to the core of

the Israeli state’s very existence, solutions to the ensuing problems will be provided through

innovative approaches. These approaches and modes of thinking can only be implemented

through constant and relentless research. For example, advancing agriculture through

research and innovations is a very important tool for Israel against the incident of

desertification. The currently trendy labeling of high tech agriculture currently sweeping the

dry areas of our planet attributes a lot of its beginnings to a long array of Israeli innovations. 41Currently, in Israel, there are many research institutions focused on agricultural research

like Agricultural Research Organization, Central Experimental Station, Desert Agriculture

Research Station, Gilat Research Center, Golan Research Institute, Institute for Technology

and Storage of Agricultural Products, Institute of Agricultural Engineering, Institute of

Animal Science, Institute of Field and Garden Crops, Institute of Horticulture, Institute of

41Policies for Agro-technology in Israel retrieved from

http://mashav.mfa.gov.il/mfm/web/main/document.asp?DocumentID=31763&MissionID=162

10 on 11.02.2012

98

Plant Protection, Institute of Soil, Water and Environmental Sciences and Soil Erosion

Research Station.

Water conservation and water use efficiency are extremely important to water resource

management in Israel. These objectives are being achieved through realistic water pricing,

community education and awareness, advances in irrigation technology and revolutionary

agricultural practices. Irrigation - The country has eight major and several small-to-medium-

sized companies producing irrigation and filtration equipment, all internationally active. To

reduce the water used for agriculture, advanced water and saving techniques were applied,

notably the drip system, which directs the water flow straight to the root zone of plants. In

addition, computerized irrigation systems were introduced and climate-controlled greenhouse

agriculture was significantly expanded.

POLICIES AND NORMS OF INDIA FOR AGRO TECHNOLOGY

India does not have any specific policies and norms for import and export of agricultural

technology as India itself lacks behind in agricultural technology. However, it has framed

various policies by which the productivity and the production of agricultural produce can be

increased. 42The National Policy on Agriculture seeks to actualize the vast untapped growth potential of

Indian agriculture, strengthen rural infrastructure to support faster agricultural development,

promote value addition, accelerate the growth of agro business, create employment in rural

areas, secure a fair standard of living for the farmers and agricultural workers and their

families, discourage migration to urban areas and face the challenges arising out of economic

liberalization and globalisation.

The policy will seek to promote technically sound, economically viable, environmentally

non-degrading, and socially acceptable use of country’s natural resources – land, water and

genetic endowment to promote sustainable development of agriculture. Measures will be

taken to contain biotic pressures on land and to control indiscriminate diversion of

agricultural lands for non-agricultural purposes. The unutilized wastelands will be put to use

for agriculture and afforestation.

42 New Agriculture Policy of India retrieved from

http://www.usitc.gov/publications/332/executive_briefings/EBOT_IndiaAgSubsidies.pdf on

15.02.2012http://agricoop.nic.in/agpolicy02.htm on 15.02.2012

99

The research and extension linkages will be strengthened to improve quality and

effectiveness of research and extension system. The extension system will be broad-based

and revitalized. Innovative and decentralized institutional changes will be introduced to make

the extension system farmer-responsible and farmer-accountable. Role of Krishi Vigyan

Kendras (KVKs), Non-Governmental Organizations (NGOs), Farmers Organizations,

Cooperatives, corporate sector and para-technicians in agricultural extension will be

encouraged for organizing demand-driven production systems. Development of human

resources through capacity building and skill upgradation of public extension functionaries

and other extension functionaries will be accorded a high priority. The Government will

endeavour to move towards a regime of financial sustainability of extension services through

effecting in a phased manner, a more realistic cost recovery of extension services and inputs,

while simultaneously safeguarding the interests of the poor and the vulnerable groups.

Adequate and timely supply of quality inputs such as seeds, fertilizers, plant protection

chemicals, bio-pesticides, agricultural machinery and credit at reasonable rates to farmers

will be the endeavour of the Government. Development, production and distribution of

improved varieties of seeds and planting materials and strengthening and expansion of seed

and plant certification system with private sector participation will receive a high priority.

Bridging the gap between irrigation potential created and utilized, completion of all on-going

projects, restoration and modernization of irrigation infrastructure including drainage,

evolving and implementing an integrated plan of augmentation and management of national

water resources will receive special attention for augmenting the availability and use of

irrigation water.

In order to reduce risk in and impart greater resilience to Indian agriculture against droughts

and floods, efforts will be made for achieving greater flood-proofing of flood prone

agriculture and drought-proofing of rain fed agriculture for protecting farmers from vagaries

of nature. For this purpose, contingency agriculture planning, development of drought and

flood resistant crop varieties, watershed development programmes, drought prone areas and

desert development programmes and rural infrastructure development programmes, will

receive particular attention. 43The Government will focus on quality aspects at all stages of farm operations from sowing

to primary processing. The quality of inputs and other support services to farmers will be

43New Agriculture Policy of India retrieved from http://indiaagronet.com/indiaagriculture.htm on 17.02.2012

100

improved. Quality consciousness amongst farmers and agro-processors will be created.

Grading and standardization of agricultural products will be promoted for export

enhancement. Application of science and technology in agriculture will be promoted through

a regular system of interface between Science &Technlogy institutions and users/potential

users, to make the sector globally competitive.

The role of Intellectual Property Rights in agricultural Research and Development is

becoming significant in view of liberalized economic policies of the Government of India.

With developments in hybrid seed industry and, later, the biotechnology- driven life sciences

industry, plant breeding became big business and, thus enhanced the importance of IPR in

agriculture. In view of liberalization in economic policies, role of agricultural R & D has

become more and more competitive. IPR provide an opportunity to get first-rate seed

technology, which in turn may help in enhancing agricultural production. It is, therefore,

imperative that proper systems dealing in IPR are put in place to safeguard interests of

investors as well as of the society. At the international level, a sui generis system was first

established in 1961 for protection of new plant varieties. The sui generis system provides

protection that is less stringent than provided by patents. Patents are also granted for

innovations related to agricultural technologies. The Government of India passed Protection

of Plant Varieties and Farmer’s Rights Bill on 9th August 2001. The bill provides flexibility,

better protection of farmers, rights and stronger exemptions for researchers to use protected

varieties for research purposes. Under researchers’ right, any person for conducting

experiment or research or for the purpose of creating other varieties can use a registered

variety. The farmers are entitled to save, use, sow, resow, exchange, share or sell their farm

produce including seed of a variety protected in the same manner as they were entitled before

except that they cannot sell branded seed of such registered variety.

PRESENT TRADE BARRIERS FOR AGRO TECHNOLOGY

Slow agricultural growth is a concern for policymakers in India. Poorly maintained irrigation

systems and almost universal lack of good extension services are among the factors

responsible. Farmers' access to markets is hampered by poor roads, rudimentary market

infrastructure, and excessive regulation.

101

44The low growth rates may constitute in part a response to inadequate returns to Indian

farmers. India has very poor rural roads affecting timely supply of inputs and timely transfer

of outputs from Indian farms, inadequate irrigation systems, crop failures in some parts of the

country because of lack of water while in other parts because of regional floods, poor seed

quality and inefficient farming practices in certain parts of India, lack of cold storage and

harvest spoilage causing over 30% of farmer's produce going to waste, lack of organized

retail and competing buyers thereby limiting Indian farmer's ability to sell the surplus and

commercial crops. The Indian farmer receives just 10 to 23 percent of the price the Indian

consumer pays for exactly the same produce, the difference going to losses, inefficiencies and

middlemen traders.

Within India, average yields for various crops vary significantly between Indian states. Some

Indian states produce two to three times more grains per acre of land than the grain produced

in same acre of land in other Indian states. The differences in agricultural productivity within

India are a function of local infrastructure, soil quality, micro-climates, local resources,

farmer knowledge and innovations. However, one of the serious problems in India is the lack

of rural road network, storage, logistics network, and efficient retail to allow free flow of

farm produce from most productive but distant Indian farms to Indian consumers. Indian

retail system is highly inefficient. Movement of agricultural produce within India is heavily

and overly regulated, with inter-state and even inter-district restrictions on marketing and

movement of agricultural goods. The talented and efficient farms are currently unable to

focus on the crops they can produce with high yields and at lowest costs. 45In general, Israel offers a good commercial environment for U.S. companies. The United

States-Israel Free Trade Agreement (FTA) has eliminated almost all tariffs, leaving Israel's

agricultural sector as the only one with substantial barriers. Israel’s main barriers to trade in

agricultural products appear to be non-tariff barriers rather than tariffs. As a result of the wide

array of free-trade agreements concluded by Israel with foreign countries, the large majority

of manufacturing imports enter Israel under preferential (mostly duty free) rates.

44 Trade Barriers for Agriculture sector in India retrieved from http://www.ustr.gov/trade-agreements/free-trade-agreements/israel-fta on 19.02.2012

45 Trade barriers for agro technology in Israel retrieved from http://www.globaltrade.net/f/business/text/Israel/Trade-Policy-Trade-Barriers-in-Israel.html on 21.02.2012

102

Regarding intellectual Property Rights, while there has been improvement in the level of

illegal production, importation, and sale of copyrighted and trademarked goods, serious

problems still exist.

INDIAN AGRICULTURE: CHALLENGES AND OPPORTUNITIES

Introduction 46India will need 320 MT of food grains by 2025 to cater to a population of 1.3 bln – as per

an estimate of the Ministry of Agriculture.Boosting farm output is urgent as India will never

be free from swings in international prices in a globalised world.

India's agricultural productivity still ranks far below the best in the world.Food-grain

production in 2007-08 was 230.7 mln tons enough to cater to a population of 1.1 bln. Within

India, different states have different productivity due to various reasons- One reason is land

holding.

Policy Drivers of Agricultural Growth in Gujarat

Gujarat state adopted an aggressive industrial policy. Gujarat government has actually

devoted a great deal of energy and resources to accelerating agricultural growth in the state

through broad spectrum of policy initiatives.

These can be grouped in the following:

1) 47Improved Market Access

2) Amended the Agricultural Marketing Committee (APMC) Act to enable

farmers to directly sell their products to wholesalers, exporters, industries and

large trading companies.

3) The government also encouraged large corporates to establish retail chains to

source their requirements directly from farmers.

46 Opportunities for India in Agricultural Technology sector retrieved from http://www.business-standard.comindianewsshankar-acharya-agriculture-be-like-gujarat442588 on 27.02.2012

47Opportunities for India in Agricultural Technology sector retrieved from http://www.gujaratindia.com/initiatives/initiatives.htm on 3.03.2012

http://www.vibrantgujarat.com/focus-sectors.htm on 5.03.2012

103

4) Promote diversification to high value crops, especially fruits and vegetables

and spices.

5) Government offered direct capital subsidy of Rs. 2.5 lakhs to set up green

house, besides 25% relief in electricity duty.

6) Technical support, Extension and Credit

• Took several initiatives to revive farm extension, technical and credit support to farmers.

The Scientists of the revitalized agricultural universities were the mobilized to reinvest

the defunct World Bank induced “Training and Visit” (T&V) agricultural extension

model.

• Gujarat evolved its annual month-long “KrishiMahotsav” campaign as unique extension

model.

7) Canal Irrigation

Gujarat Governments have devoted substantial budgetary resources to construction of major

and medium canal irrigation project. The largest of such project is the SardarSarovar

Project (SSP) which has been mired in controversies and disputes.

Apart from SSP, several large canal irrigation systems – Mahi, Ukai-Kakrapar, Karjan, and

Damanganga provide a network of canals.Management of large irrigation projects remains an

area with much scope for improvement and innovation.

8) Management of the Groundwater Economy

• Government has lent strong support to communities and non-governmental organizations

(NGOs) to expand this work under Sardar Patel SahakariJalSanchayaYojana.

• Gujarat government created Gujarat Green Revolutions Committee (GGRC), a special

purpose vehicle (SPV) for promoting micro-irrigation, with annual funding of Rs.1500

crore.

• JyotigamYojana : Designed to ration power supply to farmers and provide 24/7 three

phase electricity to non-farm rural users. Most Indian states charge subsidized flat tariff

for farm power and some states like Punjab, Tamil Nadu and Andhra Pradesh provide

free power.

• With this Gujarat Government started rationing power supply. Gujarat follows all three

recommendation of International Water Management Institute (IWMI):

104

A. Ration power supply to fit irrigation demand schedules.

B. Provide power ration against a fixed, preannounced schedule.

C. Overcome farmer resistance by offering to farmers uninterrupted power supply of full

voltage.

Future of Irrigation in India

Over the last century, the global population has tripled, and water consumption has increased

threefold (UNESCO 2005).In an agrarian economy like India, the importance of water for

agricultural productivity hardly needs any emphasis. India faces the daunting task of

increasing its food production by over 50 percent in the next two decades, and reaching

towards the goal of sustainable agriculture requires a crucial role of water (Kumar 1998).

35

Empirical evidence suggests that increase in agricultural production in India mostly has taken

place under irrigated conditions; close to three fifths of India’s grain harvest comes from

irrigated land (Brown 2003). India’s irrigated area expanded at a steady rate during the last

few decades. The net irrigated area has increased by 24% during 1980-81 to 1990-91 and by

18% from 1990-91 to 2000-2001.

Irrigation intensity representing the intensive margin has increased by 8.8% over the past two

decades (Damodaran 2001).Thus the population pressure and the need for adequate

livelihood opportunities for the increasing population on the available agriculture land have

increased substantially over this period.It is essential to project India’s future irrigation

scenarios.

The most relevant question is regarding the magnitude of the change in irrigated area India is

expecting in future.

48Opportunity for Plastic Industry:

Leadership among the Indian Plastics Industry, need to guide the Indian Plastic Processor to

tap the market potential of Indian Agriculture. The bridges need to make with the plastics

48 Opportunities for Plastic industry retrieved from http://www.plastemart.comPlastic-Technical-Article.aspLiteratureID=1603&Paper=indian-agriculture-challenges-and-opportunities-for-indian-plastics-industry on 5.03.2012

105

processors and Indian farming community at all levels. Case studies need to be created over a

period of time, which would be showcase to the farming community, demonstration of higher

yields, guaranteeing higher income by reducing the wastage. This is the job of the leadership

to open the gateways and orient the plastic processor spread all over India towards the new

markets, at the horizon. The Indian Plastics Industry can multiply several times if this Indian

Elephant of Agriculture starts moving.

CONCLUSION

India has made impressive strides on the agricultural front during the last three decades.

Much of the credit for this success should go to the several million small farming families

that form the backbone of Indian agriculture and economy. Despite the impressive growth

and development, India is still home to the largest number of poor people of the world. With

about 250 million below the poverty line, India accounts for about one-fifth of the world’s

poor. India has high population pressure on land and other resources to meet its food and

development needs. The natural resource base of land, water and bio-diversity is under severe

pressure.

Main Issues:

In national priority setting, the following recurring and emerging issues for sustainable

agricultural development and poverty alleviation must be considered:

1. Population pressure and demographic transition;

2. Resource base degradation and water scarcity;

3. Investment in agriculture, structural adjustment and impact on the poor;

4. Globalization and implication on the poor;

5. Modern science and technology and support to research and development

6. Rapid urbanization & urbanization of poverty, and rural poverty reduction.

In addressing the above issues, a policy statement on agriculture must take note of the

following uncommon opportunities:

• Conservation of natural resources and protection of environment.

• Vast untapped potential of our soil, water resources, and farming systems

• Technology revolution especially in the areas of molecular biology,

biotechnology, space technology, ecology and management.

106

• Revolution in informatics and communication and the opportunity of linking

farmers, extension workers and scientists.

The Agriculture Policy document must articulate a clear vision on following few basic

parameters of the agricultural sector:

1. Organization of agriculture: A clear long-term vision where inter-

sectorial linkages are explicit.

2. Sustainability and natural resource management: Allocating funds for

watershed development, agroforestry, soil conservation, and so on will not

produce desired results.

3. Institutional change: Policy document must spell out new approaches

and new institutions free from the shackles of bureaucratic and self-help

framework.

4. Investment priorities: There is a need to develop a consensus on

investment themes, priorities and policies. Policy document must lend

strength to the claim for greater investment in rural areas.

5. Incentives: Document must articulate a clear vision on the incentive

framework.

6. Risk management

Increase Investment in Agriculture and Infrastructures

Accelerated investments are needed to facilitate agricultural and rural development through:

• Productivity increasing varieties of crops, breeds of livestock, strains of microbes and

efficient packages of technologies, particularly those for land and water management,

socio-economic and environmental constraints;

• Yield increasing and environmentally-friendly production and post-harvest and value-

addition technologies;

• Reliable and timely availability of quality inputs at reasonable prices, institutional and

credit

• Effective and credible technology, procurement, assessment and transfer and

extension system involving appropriate linkages and partnerships.

107

: A Study of Defence industry:

INTRODUCTION OF DEFENCE INDUSTRY OF ISRAEL

Israel produces a wide range of products from ammunition, small arms and artillery pieces to

sophisticated electronic systems and the world's most advanced tank.

Faced with a shrinking market for military hardware over the last decade and a half, Israeli

defence concerns have made a concerted effort to employ their research and development

teams in devising products for non-military markets and, more frequently, in adapting

defence technology for civilian applications. Indeed, many of the most innovative products

developed by Israel's civilian high tech industry, especially in the field of

telecommunications, trace their origins to military technology.

• Born Of Necessity

The modern defence industry in Israel was set in motion in the early 1920s. Faced by an

increasingly hostile Arab population, the Jewish community began to manufacture

homemade hand grenades and explosives. In the early 1930s, members of the Haganah (the

pre-state Jewish underground defence organization) set up clandestine small arms factories,

which became the Israel Military Industries (IMI) in 1948. In the first two decades after

independence, IMI produced many of the basic weapons used by the IDF, including the Uzi

sub-machine gun.

• Making History

IAI was established in 1953 as Bedek Aviation Company with the aim of supporting the

defence of the beleaguered five-year old nation. It is doubtful if the 70 dedicated employees

operating from a ramshackle site on the sanddunes of Israel’s Lod Airport could have

imagined the heights their company was destined to attain.

• Industry Players

There are approximately 150 defence firms in Israel, with combined revenues of an estimated

$3.5 billion. The three largest entities are the government-owned IAI, IMI and the Rafael

Arms Development Authority, all of which produce a wide range of conventional arms and

108

advanced defense electronics. The medium-sized privately owned companies include Elbit

Systems and the Tadiran Group, which focus mainly on defence electronics.49

STRUCTURE , FUNCTION and BUSINESS ACTIVITIES OF DEFENCE INDUSTRY

• The Government Sector

In the wake of the Lavi's cancellation, IAI diversified and expanded with funding from the

United States, developing the Amos and Ofeq satellites and the world's first operational anti-

missile missile system, the Arrow.

• The Private Sector

Elbit Systems, based in Haifa, develops, manufactures and integrates advanced, high-

performance defense electronics systems, focusing on upgrade programs for aircraft and

armored vehicles.

• Civilian Markets

Since the end of the Cold War, the global defense industry, including the IDF, has had to

cope with declining military spending. In response, many private companies have either

merged or reduced staff, or diversified into civilian markets, with some companies fully

spinning off their civilian activities into separate businesses. In 1968, IAI acquired the rights

to manufacture the Jet Commander executive aircraft from the US company Rockwell, which

eventually evolved into the IAI's Astra. In the 1990s, IAI began producing the Galaxy

executive jet in partnership with the Pritzker family of Chicago. In April 2001, the

international aerospace firm General Dynamics contracted to purchase the Galaxy firm for

approximately $600 million. In addition, in the late 1970s Bedek, a division of IAI

specializing in aircraft maintenance, began overhauling and refitting Boeing 707 airliners,

and today the upgrade of commercial aircraft has become a major business for IAI. The

civilian content of the new contracts signed in 2000 was worth $1.1 billion, or 42% of total

new contracts. IMI has fewer civilian businesses but has developed technology for electronic

wallets and computerized payment systems.

• Strategic and Economic Roles of Defence Industries in Israel

49 Retrieved from : http://www.jewishvirtuallibrary.org/jsource/Economy/eco1.html on 05.02.2012

109

Changing security conditions demand a revaluation of the strategic and economic roles of

the Israeli defense industry. In its earlier years, the Israeli government sought to achieve

selfsufficiency and reduced reliance on defense imports.

In setting priorities for today’s defence industry, policymakers should rank the various

threats to Israel's security according to relative severity while acknowledging the potential

roles of the industry in responding to these threats. Israel is presently facing three different

kinds of security threats. In order of severity, they are:

• Long-distance existential threats from an enemy without a common border that might

involve the use of weapons of mass destruction;

• Threats of full-scale conventional armed conflict with neighbouring enemies;

• Threats of terrorism against targets inside Israel or targets identified with Israel abroad.50

COMPARATIVE POSITION OF ISRAEL AND INDIA

Indo-Israeli Defence Ties

The hitherto low-profile India-Israel diplomatic-military engagement was suddenly thrust

into limelight after three suspected terrorists from Iran attacked an Israeli diplomat in the

heart of New Delhi’s high security zone last month. Since that attack, New Delhi has been

walking a diplomatic tightrope because it has strategic ties with both Tehran and Tel Aviv.

Iran is important for the volume of crude oil that India imports from there but Israel is no less

crucial for India. Ever since overt diplomatic ties between India and Israel began about two

decades ago, Israel has been India’s leading defence partner, briefly overtaking even the

erstwhile Soviet Union as India’s largest arms supplier in 2008. Defence cooperation with

Israel continues to be the main driving force in the relationship between the two countries.

But India is wary of acknowledging that importance too openly lest it offends the muslim

constituency back home and its strategic partners in West Asia like Iran and Saudi Arabia.

Indo-Israel Military Relations

Arms sales form the backbone of the Israeli economy. There are nearly 150 defence firms in

Israel, with combined revenues estimated at US $3.5 billion. The three largest arms

manufacturing groups in Israel are the government-owned Israeli Arms Industry (IAI), Israel 50 Retrieved from : http://en.wikipedia.org/wiki/Israel_Military_Industries on 12.02.2012

110

Military Industries (IMI) and the Rafael Arms Development Authority, all of which produce

a wide range of conventional arms and advanced defence electronics. In addition, there are

privately owned weapons manufacturing companies like Elbit Systems and the Tadiran

Group.

INDIA-ISRAEL DEAL

Israel Aerospace Industries (IAI), the defence firm that was awarded a controversial

Rs10,000crore contract for the joint development of medium-range surface-to-air missiles

(MRSAMs), confirmed on Thursday that it had indeed signed the deal. But it made a

surprising disclosure:

The deal was kept under wraps at the insistence of the government of India.51

Present Position and Trend of Business

India has leaped to become Israel's second largest export destination, only next to close ally

the US, as the Jewish state focuses on tapping potential in the Asian markets. As per the

figures provided by the Israel's Export and International Co-operation Institute, India jumped

from the eighth position to the second favoured destination for Israeli exports in the first half

of 2010, daily 'Ha'aretz' reported. Israeli exports to India in the first half of this year equalled

USD 990 million, an increase of 102 per cent compared to that in the same period last year.

The reason for this sharp jump was a 63?per cent leap in exports by Israel's mining, minerals

and quarrying sector, which exported USD 228 million worth of products, mainly fertilisers

to the sub-continent. One of the biggest exporters to India in this sector was Dead Sea Works,

a subsidiary of Israel Chemicals.52

POLICIES AND NORMS OF ISRAEL FOR DEFENCE INDUSTRY FOR IMPORT-

EXPORT INCLUDING LICENSING, PERMISSION, TAXATION ETC.

As per the data revealed by the reputed Swedish research center which monitors global arms

purchases, India tops the list of countries that have the largest arms imports, followed by

51 Retrieved from : http://www.state.gov/r/pa/ei/bgn/3581.htm on 03.03.2012

52 Retrieved from : http://www.biu.ac.il/SOC/besa/docs/perspectives164.pdf on 05.03.2012

111

China, South Korea and Pakistan. The data on arms transfers released by Stockholm

International Peace Research Institute (SIPRI) indicated that India received 9 per cent of the

volume of international arms transfers during 2006 to 2010. The report added that the four

largest importers of conventional weapons in 2006 to 2010 are all located in Asia with China

and South Korea garnering 6 per cent each and Pakistan with 5 per cent of the volume of

international arms transfers.

Policy and Norms for growth of Israel Defence Industry

The circumstances that led to Israel's establishment, its constant struggle for survival and

disappointments with foreign suppliers dictated the development of Israeli domestic arms'

manufacturing capabilities. During the pre-state years and after, Israeli leaders were acutely

aware of the inherent imbalance between Israel and its Arab neighbors, resulting from its

small territory and population, as well as a lack of natural resources. The constant threat to

national survival forced Israel to seek external sources of weapons and military technology.

Initial attempts to buy weapons and warfare-related equipment met with difficulties, as arms

suppliers were reluctant to develop a steady relationship. Consequently, a constant

uncertainty with regard to external sources of weapons and technology prevailed, and there

was a growing fear that the needs of the Israel Defense Forces (IDF) could not be met if

Israel remained totally dependent on imported weapons only.

Israel's Progress in Weapons and Military Technologies

Decade Product

1940s Hand grenades, submachine guns, mortars, armoured cars

1950s Uzi submachine gun, small arms and ammunition

1960s Fouga Magister jet trainer (licensed production); Gabriel

anti-ship missile, Jericho intermediate-range ballistic

missiles; first generation non-conventional capabilities

1970s Unmanned Aerial Vehicles; Laser range-finders and

designators; Galil assault rifle; Reshef missile boat family;

Kfir fighter; Merkava tank; Barak surface-to-air missile;

Popeye air-to-ground missile;

1980s Electronic-warfare suits, ELINT and COMINT systems;

112

Thermal imaging and electro-optical systems; Ofeq

reconnaissance satellite; Jericho ballistic missile mark 2;

Harpy attack UAV; Lavi fighter (cancelled); secured

communication systems; deciphers and encoders; Python-

4 all aspect air-to-air missile; Directed energy weapons;

advanced armor techniques and anti-armor weapons;

energy weapons.

1990s Attack multi-purpose UAVs; complex composite

structures; cyber-warfare; Arrow anti-ballistic missile;

simulators; Electronic Warfare systems; communication

systems; remote sensing; anti-tank guided missiles; cruise

missiles; upgrade programs; Merkava tank Mk. 4;

http://www.dgft.org/export_import_exim_policy_india.html on 06.03.2012

Policies and Norms of India for Import or export including licensing, Permission,

Taxation etc.

As part of the ongoing modernization drive of the Indian armed forces, the central

government has increased the allocated expenditure in the defence sector to US$ 37.3 billion

approximately. Of this, USD 12.5 billion is allocated for direct defense capital acquisition

and US$ 15.73 is allocated for capital expenditure which is an increase of approximately 12%

from the previous assessment year.53

Present Trade barriers for import and Export

India and Israel will further expand bilateral trade and investment relations building on the

respective strengths of the two economies. This was highlighted during discussions here this

evening between Shri Kamal Nath, Minister of Commerce & Industry and Mr. Eli Yishai,

Deputy Prime Minister and Minister of Industry, Trade and Labour of the Government of

Israel, who was accompanied by a large Israeli business delegation. Shri Kamal Nath

described Mr. Yishai’s visit as an important milestone in the development of bilateral

relations between the two countries and said this was in continuation of the process started by

the Israeli Prime Minister Mr. Ehud Olmert’s visit to India in December 2004 when it was

53 Retrieved from : http://www.dgft.org/export_import_exim_policy_india.html on 06.03.2012

113

agreed to establish a Joint Study Group to make recommendations on mechanisms and targets

for expanding trade and economic cooperation.54

POTENTIAL FOR IMPORT/EXPORT IN INDIA

Israel is climbing the list of the world's top arms exporters, and as such will redouble efforts

to make responsible exports, PinchasBucharis, director general of the country's defense

ministry, announced this week.

"Defense exports in 2007 reached more than $4 billion," Bucharis said via a ministry

statement. "Israel is in fourth place (in the world) in defense exports, above Britain," he

continued.The United States, Russia, and France top the list, the Israeli daily newspaper

Haaretz noted in a report.Bucharis made the announcement in conjunction with the unveiling

of a new Defense Ministry initiative to supervise Israel's arms and technology exports.He

said, according to a ministry statement: "The oversight law has renewed the security

industry's interest (in supervision) and will prevent the spread of weapons to agents that

endanger the world."

Business Opportunities in Future

The Israeli population is a well educated, industrious work force well adapted to a globalized

market. Hungry for innovation and driven by an entrepreneurial spirit, Israelis have invented

some of the most important technological advances of the last 60 years.

Israelis have developed key technologies essential to the digital revolution. Voice mail,

camera phone chips, fire wall software, Intel’s Pentium chips, Microsoft XP and Vista,

instant messaging and voice over IP all owe their existence to Israeli innovation. 55

54 Retrieved from : http://commerce.nic.in/pressrelease/pressrelease_detail.asp?id=1860 on 10.03.2012

55 Retrieved from : http://www.defenseindustrydaily.com/israels-defense-exports-reached-44b-in-2006-02945/ on 15.03.2012

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CONCLUSION

• The growth of the Israeli defense industry was a combination of policy and

circumstances. The realization that, despite the traumatic experience of the Holocaust,

the Jewish state was still subjected to existential threats by the Muslim world, have

led to the psychological as well as material institutionalization of the Centrality of

Security concept. This perception has been strengthened by various arms embargoes

and broken agreements inflicted by foreign suppliers.

• Consequently, Israel's policymakers allowed a rapid expansion of the state-owned

arms industries and their involvement in the production of indigenous state-of-the-art

weapon systems.

• The industries became the largest manufacturing and technological sector in Israel,

employing tens of thousands, most of them organized in strong unions, and

contributing enormously to the Israeli military qualitative edge, the nation's

diplomatic efforts and its economy.

• The shift in the IDF's procurement policy, following the 1979 Camp David peace

treaty with Egypt, effectively ended the industry's raison d'être.

• The growing dependence on American weaponry deprived the Israeli companies of

their most important client and sales promoter, and forced them to rely on foreign

customers to ensure sufficient revenues. This exposed them to the cyclical nature of

the arms exports market and to fluctuations in the official rate of exchange.

• The simultaneous drop in domestic and foreign orders in the late 1980s and at the

beginning of the 1990s revealed the industries' vulnerability. Their inherent

weaknesses threatened their very existence and contributed to their financial downfall.

• The government stabilized their financial condition but refrained from addressing

their basic structural and labor deficiencies due to a combination of political cost

calculations, incoherent policies and a chronic problem of agenda congestion.

• Restructuring, consolidation and privatization of the state-owned sector have been

kept firmly off the agenda despite their commercial and financial benefits.

Policymaking toward this sector was (and still is) crisis-driven and responsive rather

than pro-active.

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• Following the government's massive handout, the state-owned industries showed

signs of recovery in the second half of the 1990s, but there are major question marks

as to their long-term viability.

• Privately owned industries emerged as strong and viable competitors, both

domestically and internationally, while the IDF continued to reduce its local

purchasing considerably across the entire industry.

• The substantial cut in Israel's defense R&D budget and the decline in research

partnerships with foreign clients will restrict the industry's capacity to develop

successful--and export worthy--weapons systems.

• The arms exports restrictions imposed by the United States, Israel's patron and main

benefactor, will deter foreign consumers, while the Israeli industries, both private and

state-owned, would have to face as competitors the giant firms now existing in Europe

and the United States.

• Israeli companies are not permitted to join or merge with multinational alliances in

the defense sector, and this position is unlikely to change in the near future.

• In light of the above, the long-term viability of the Israeli defense industry remains

questionable. Unless the government would devise and implement a plan for the

restructuring and preservation of the state-owned industries, which seems improbable

under the prevailing circumstances, their demise--especially in the case of the

technology-starved IMI--is likely.

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: A Study of Diamond Industry:

Israeli Diamond Industry

The Israeli Diamond Industry has been a leading global diamond manufacturing and a

diamond trading centre for over seven decades. Over the years the diamond industry has

evolved to serve as a symbol of outstanding excellence, achieved by a unique mixture of one-

of-a-kind elements.

The Israel Diamond Institute (IDI) Group of Companies is a non-profit, public interest

company that represents all organizations and institutions involved in Israel’s diamond

industry. The Israeli Diamond Industry, diamantaires’ and diamond suppliers claim a leading

position in the global market, thanks to extensive worldwide marketing initiatives,

participation in leading jewelry and diamond trade shows, and hosting international

conferences and delegations.

The Israeli Diamond Industry Portal

The Israeli Diamond Portal serves as a fundamental and intrinsic tool in the IDI Group’s

efforts to promote the Israeli Diamond Industry. Since its launching in 2004, it has facilitated

the development of business relationships among thousands of diamantaires, diamond

wholesalers, diamond suppliers, diamond manufacturers, diamond retailers and jewelers in

Israel and worldwide.

Specialties

Exploring new markets for diamonds and gemstones Linking diamond traders with buyers

and retailers worldwide Providing vital infomation regarding diamond prices and sales

worldwide Marketing Israeli diamonds worldwide.

The Israel Diamond Exchange (IDE), one of the largest and most sophisticated diamond

centers in the world, was established in 1937 and counts approximately 3,000 members

engaged in manufacturing, import and export and marketing of rough and polished diamonds.

IDE creates a business framework for its members, enabling both members and visitors to

conduct their business in maximum convenience and security, both in the trading hall and

within the confines of their private offices.

In this setting members and visitors have access to a complete range of services within the

complex --from essential business services such as shipping agents, commercial banks,

insurance companies, the government diamond controller's office, customs office, post office,

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gemological labs - to conveniences such as restaurants, shops, lounge, intensive care room,

synagogue and more -- and have no need to leave the secured complex.

IDE’s huge diamond trading floor consists of two trading halls (for rough and polished

stones) spanning an area of approximately 2,500 sq. meters. Hundreds of diamantaires

operate daily in the vibrant trading halls together with numerous foreign buyers who come

from all corners of the globe to purchase their diamonds in Israel.

The IDE trading halls are furnished with state of the art equipment – sophisticated

communication systems, computers and internet networks and official diamond weighing

services. Also located in the trade halls is an advanced technology area boasting sophisticated

equipment for diamond checking, including instruments for analyzing rough diamonds and

laser branding, a diamond photocopier, tools for color filtering, microscopes, etc.

ISRAEL DIAMOND MANUFACTURERS ASSOCIATION

For Advancement of the Israel Diamond Industry

The Israel Diamond Manufacturers Association for Advancement of the Israel Diamond

Industry represents 200 diamond manufacturers, who account for approximately 95% of the

total output of the Israel diamond industry.

Internal Affairs

Activities within the Israeli industry include:

Preparation of agreements with the labor unions and handling ongoing matters of

workers conditions based on the agreements.

Settlement of misunderstandings and disputes between workers and employers, by

means of the Parity Committee and in cooperation with the National Federation of Labor and

the Ministry of Labor; provision of legal advice in all matters related to labor conflicts.

Proposal of legislation and regulations in order to assist and promote

the Israel diamond industry; negotiations with tax authorities through the industry-wide

Taxation Committee.

Active membership on the Board of Directors of the Israel Diamond Institute:

Promotion of diamond marketing

Guidance of the editorial board of the industry publication, Hayahalom

Representation on the Board of the Directors of the IDI Gemological Laboratory

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Representation in the Office for Coordination of Economic Organizations of the

Federation of Israeli Economic Organizations.

Participation in industry-wide activity to promote relations with the precious stones

and jewelry industries.

Organization of special events, such as the Diamond Industry Dignitary award, the

IsDMA Jubilee, the Outstanding Worker award, fundraising for charities and others.

International Relations

The IsDMA’s activities outside the borders of Israelinclude:

Making contact and maintaining close relationships with rough diamond suppliers.

Exclusive representation of the Israel diamond industry at official meetings with

the DTC in London. Representation of the diamond manufacturers in the International

Diamond Manufacturers Association (IDMA).

Representation of the diamond manufacturers on the issue of “conflict diamonds” through

participation in the World Diamond Council (WDC) and the Kimberley Process.56

Introduction of diamond industry in isreal

Israel’s diamond industry in the 1980s differed considerably from its 1950s version. Until the

early 1980s, a handful of large firms dominated the Israeli diamond industry. The nucleus

consisted of European Jewish cutters who had immigrated during the Yishuv. In the 1970s,

Israel surpassed Antwerp as the largest wholesale diamond centre, accounting for more than

50 per cent of all cut and polished gem diamonds. Diamonds were the only export in which

Israel was more than a marginal supplier. 57 The diamond industry imported rough diamonds, cut and polished them, and then exported

them. The result was a complete restructuring of the industry in FY 1984, and the creation of

approximately 800 new and smaller manufacturing units. These small entities in mid-1986

concentrated exclusively on cutting, leaving the marketing to larger export firms. The United

States, the world’s largest market for polished diamonds, imports over half of its polished

diamonds from Israel.

56 http://www.israelidiamond.co.il/english/news.aspx?boneid=3024 57 http://www.israelidiamond.co.il/english/news.aspx?boneid=1447

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Structure, Functions and Business Activities of isreal industry

As the umbrella organization of The Israeli Diamond Industry, the Israel Diamond Institute

(IDI) Group of Companies has a clear philosophy with goals that are deeply rooted in daily

implementation and practice.

Leading Israel’s diamond industry into the 21st century and maintaining its position at the

apex of the global diamond industry through exceptional, round the clock, comprehensive,

all-inclusive services.

Constantly ensuring that the industry’s services maintain their reputation as exceptional and

extraordinary.

Canvassing the global market, searching for new rough diamond sources, markets, ventures,

clientele as well as new technologies and manufacturing techniques.

Monitoring the international diamond industry for new trends, phenomena and events, as well

as parallel and relevant luxury industries such as fashion, beauty and leisure.

Maintaining and strengthening our brand through new and innovative branding

methodologies, advertising strategies, and ground breaking creative campaigns and online

portal coverage.

The structure of the diamond industry is like a pyramid: at the top are a small number of large

modern factories, each employing between 4,000 to 5,000 workers; below them there are the

medium units, employing up to 500 workers; and at the bottom are a large number of small

units, employing up to 50 workers. The large units are registered under the Factories Act.

These units are keen to be registered, as they cannot export or import directly without the

DTC (De Beers Trading Company) Certificate, which can be accessed only if they are

registered7.

Comparative Position of Diamond Industry with India and Gujarat

STRENGTHS:-

• Availability of cheap and skilled labor

• Experience

• Pricing and inventory management

• Supportive government policy

• Low cost of production

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WEAKNESS:-

• Less emphasis on quality

• Low productivity

• No contracts

• Lack of standardization

• Insolvency

OPPORTUNITIES:-

• New markets

• Colored diamonds

• Scope in domestic market

• Outsourcing of diamond jewellery

THREATS:-

• Entry of China and Thailand in the diamond sector

• Conflict diamonds

• Use of child labor

• Anti social activities and threat of terrorism

Present Position And Trend of Diamond Industry (Import/Export) with India

The diamond industry consists of segments that mines, processes and markets gem diamonds

and industrial diamonds. Gem quality diamonds are mined primarily

in Botswana, Russia, SouthAfrica, Angola, Namibia, Australia and Democratic Republic of

the Congo.

It takes an average of 250 tons of mined ore to produce one carat of finished diamond. 92%

of diamond pieces cut in 2003 were in Surat, Gujarat, India. Other important centers of

diamond cutting and trading are Antwerp, London, New York, Tel Aviv, Amsterdam. More

than 50% of the world’s production of rough, polished and industrial diamond passes through

Antwerp. 8 in 10 of all rough diamonds in the world are handled in Antwerp. 1 in 2 of all cut

diamonds passes through Antwerp. The Antwerp diamond sector has an annual turnover of

39 billion U.S. dollars.

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The Diamond Trade Company (the distribution arm of De Beers) sorts and distributes 45% of

the world’s rough diamond supply. The balance is sorted and sold in centres such as Antwerp

and more recently Mumbai. The DTC exclusively sells to 93 clients that are called

“Sightholders”. The best quality diamonds in terms of colour and clarity are distributed to the

gem market with an accompanying Kimberley Process certificate to prove that they are from

conflict free sources. The remainder are ultimately used for industrial purposes, such as

cutting and drilling.

Policies and norms of Israel for diamond industry58

Principles

• In choosing policy options, there are guiding principles which are recognised as important

in addressing corruption issues.

• Policies should not be over-bureaucratic, should be as simple as possible and should have

a clear line of responsibility for their implementation.

• Policies should aim for transparency at all levels from Ministries down to grass roots.

• Policies should aim for involvement of all stakeholders in the functioning of the industry.

• Those charged with carrying out policies should be appropriately and regularly paid.

• Persons with positions in government or the civil service should not be able to participate

(directly or indirectly) in the diamond industry.

External Market

1) Single Monopoly Exporter

All diamond exporting could be by a single entity with a monopoly. The entity could be state

owned, private, or partly State and partly privately owned.

2) Multiple Licensed Exporters

Diamond exporting could be permitted by a certain number of licensed exporters, who are

required to use a government office (e.g. GGDO) for export valuation purposes.

3) Export by Tender System

Exporting could be by a tender system, in which international buyers are invited to participate

in a periodically held tender process, and through which all exported stones must be put.

58 http://www.eubusiness.com/regions/israel/aggregator/econ

122

Internal Market

1) Dealing Licences Widely Available

Licences to deal in diamonds within Israel could be made available to anyone who has the

requisite capital and skills, including foreigners.

2) Dealing Licences Available but Restricted

Licences to deal in diamonds within Israel could be made available only to Israel nationals

with requisite capital and skills.

3) Monopoly Internal Market

A single entity could be granted the monopoly right to control the local market. Individuals

who bought and sold diamonds would need to be employees of this entity. The entity could

be State owned, privately owned, or partly private and partly State.

Diamond Dealing Currency

• Diamond dealing should only be done in hard currency (US dollars)

• Allowing diamonds to be purchased in either hard currency or shekel

Licensing scheme for diamond exploration and mining (first come/first served) but with

certain areas reserved for Israel nationals with certain types of licence (i.e. artisan digging)

Licensing scheme for diamond exploration and mining, open to all-comers, with a first-

come/first served license allocation provided technical and financial conditions are met.

Grant of monopoly concession to appropriate entity

The Government could identify a foreign company, with appropriate technical and financial

resources, and grant to that entity the exclusive right to mine and export diamonds. This is

what happened earlier in the history of diamond mining in Israel, with the Israel Selection

Trust.

Complete closure of the diamond fields

The Government could completely close the diamond fields, for a limited or extended period.

Policies and norms of India for diamond industry

India has a large number of institutions to support the designing and development of diamond

industry in India. Various institutes across the country offer diploma courses in diamond

industry. Some of the institutes offering these courses are NIFT (Mumbai), Indian Diamond

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Institute (Surat), Jewellery Design & Training Institute (Noida), The Gemmological Institute

of India (Mumbai) etc.

GOVERNMENT REGULATIONS AND SUPPORT

The Government of India (GoI) has been working to develop the diamond industry in India

through several initiatives.

• The Indian diamond export industry had its modern beginning in the 1960s,when the

Government of India introduced the Replenishment (REP) licence, allowing an importer to

import rough diamonds worth 80 per cent of the value of his exports.

• The EXIM Policy for 2002-07 contains a special focus on exports of diamond

• through market access initiative schemes, duty free imports and appropriate

adjustments in value addition norms.

• The government has set up various special economic zones (SEZ) for diamond

industry with specific incentives provided to units in SEZs. diamond units in SEZs

and Export Oriented Units (EOUs) can receive precious metal, viz,

gold/silver/platinum prior to exports or post exports equivalent to value of diamond

exported.

• Lowering import duty on platinum from US$ 12.2 per 10 gms to US$ 4.64.

• Exempting rough coloured precious gems stones from customs duty at the first stage

itself instead of claiming reimbursements later.

• Rough semi precious stones are already exempt, aimed to further increase the exports

of studded diamond.

The policies for this sector announced in the Foreign Trade Policy include:

• Duty free re-import entitlement for rejected diamond up to 2 per cent of Freight on Board

(FOB) value of exports.

• Increased duty free import of commercial samples of diamond to US$ 2232.1.

• Import of gold of 18 carat and above under the replenishment scheme.

Taxation and Export Regulations

Export taxes have to be low, because diamonds are easy to smuggle.But export taxes are not

the only costs incurred by the exporter using official channels, the cost of financial

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intermediation is also a problem. After certificates of origin became available in India

exporters came out with sizable supplies; but they had to wait for weeks before shipping their

stones waiting for an agreement with the central bank to be worked out.

Re-training, re-skilling and rehabilitation of displaced diamond workers

Suitable training programmes will be organized at district level by the district administration

to train displaced diamond workers for alternative employment. The district authorities may

also identify and sponsor all eligible workers for appropriate financial assistance, loans under

various Government Schemes. In order to address this government has started a Scheme for

the unemployed diamond workers known as Ratnadeep skill enhancement training assistance

package’ during 2009.

Training for skills such as polishing, diamond assortment, bruiting, grading, planning and

marking, jewelry making etc. will be provided under the package. Curricula of Skill

enhancement training module were decided in consultation with Gujarat Council for

Vocational Training and Indian Diamond Institute of Surat

Financial relief measures for diamond workers suggested by RBI

With a view to helping the diamond sector workers to tide over the distress caused to them on

account of loss of jobs, work, soft loans with elongated repayment cycle, will have to be

considered, based on their identification by their employers. The diamond sector units will

need to sponsor such workers to the banking system.

Potential for import/export in india

India recorded US$ 15.6 billion worth of exports in the gems and jewellery sector in 2004-05,

up by 26.44 per cent from the previous year. The industry is expected to achieve exports of

US$16 billion by 2007. India exported cut and polished diamonds worth US$ 11.18 billion in

2004-05, up from US$ 8.62 billion in 2003-04, registering a growth of 29.6 per cent. India

has also started exports of rough diamonds, which formed 4 per cent of gems & jewellery

exports in 2004. the Special Economic Zones (SEZs) and Export Promotion Zones (EPZs).

Business Opportunities in future

125

The entire diamond world knows that India has a virtually complete dominance in smalls, and

that the country has for long been the world’s leading manufacturer of cut and polished

diamonds.

Selling cut and polished diamonds yields margins of just 5 per cent to 10 per cent but selling

finished diamond jewellery pieces to wholesaler’s overseas yields margins of between 20 per

cent to 40 per cent. And retailing overseas offers margins of between 40 per cent and 60 per

cent depending on the value of the diamonds. But there are challenges ahead. One is the lack

of skilled manpower and technology to create and produce designs for the international

markets. The council is hoping to tackle his by setting up a training institute. Indian firms will

have to tightly control costs and prices.

Reports on the industry from Financial Express (Gujarati.), Gujarat Samachar, Times of India

(Ahmedabad), Economic Times(Ahmedabad)

”Diamond Handbook of Surat”, Gems & Jwellery Information Centre, Jaipur, 2000 1 Manimala, M J, ” Entrepreneurial Policies and Strategies: The Innovator’s Choice”, Sage

Publications India Pvt.

Conclusions and suggestions

Following conclusions are emerged:

• On the onslaught of any such severe recession the diamond units owner should not

totally closed down the industry. Rather they can employ the same number of workers

for lesser number of days as well as hours. They can keep the factory open for two

weeks and each day for few hours. Even if they get a less wage they will not go back

to native place or switched over to any other alternative employment. This will help

the diamantaries during the recovery of the industry.

• Inculcating the consumption of diamond among domestic consumer. Some initiatives

are already taken by GJEPC to increase diamond consumption in Israel. This will help

in keeping the diamond industry buoyant.

• Modernizing the diamond industry with a skilled manpower and technology up

gradation is the need of hour. Although there are Institutes like Israel Diamond

Institute, , a separate ITI specializing training diamond workers has to be set up in

strategic location to train the semi literate work force to cater the need of the industry.

The Modular Employable Skills related to gem and jewellery can be integrated to this

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and train the workers. Apart from skill training there should be training on personality

development, English speaking, housekeeping and computer literacy. This will help

the industry to tackle the challenge posed by Chinese diamond cutting and polishing

industry.

• In order to address the challenges of recession in case any in future a detail survey of

the workers is indeed important. All the workers should have an identity card so that

policy can be implemented quickly and easily.

• To train the workers on issues related to Financial literacy and Planning so that they

can utilize their hard earned money properly.

• Housing facility in the line of rehabilitation of slum dwellers can keep the worker

back home. A roof on the head helps workers to withstand difficulties for a prolonged

period.

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: A Study of Plastic and Petroleum Industry:

Overview of the Israeli Plastic Industry:-

The Israeli plastic industry is one of the country’s most advanced industrial sectors. It is

characterized by innovation, marketplace adaptability, a strong R&D tradition and continued

export growth. With advanced production equipment, extensive technical skills and fast

turnaround time, Israeli manufacturers compete successfully in markets worldwide. Many

Israeli plastic products are sold in large hardware and DIY (Do It Yourself) chains.

Moreover, products made by Israeli plastics manufacturers have achieved worldwide acclaim

in numerous sectors as described below. The Israeli Plastic Industry is export oriented. Israeli

plastic manufacturers export a variety of products which are being used in the following

sectors59

• Plastics Raw Materials:

Polypropylene, polyethylene, polystyrene and PVC are produced in Israel in large volumes,

with a wide variety of grades for local consumption as well as for export. The leading Israeli

companies that produce plastics raw materials include Carmel Olefins (website:

www.carmel-olefins.co.il) which produces mainly Polypropylene (about 450,000 ton per

year) and polyethylene; Kafrit(website: www.kafrit.com) and Terraflex(website:

www.terraflexhoses.com) which mainly produce PVC related materials, and Tosaf

Compounds (website: www.tosaf.com) which produces high quality color and additive

masterbatches and compounds for the plastics Industry. Nevertheless, in order to meet the

needs of its relatively big local plastic industry, Israel needs to import about 50% of its plastic

raw materials. Although the US is the major source for importing these materials, Israel

imports plastics raw materials from numerous countries including various European

countries, Turkey, China, India, Taiwan, South Korea, Thailand and more. It is estimated that

Israel imports about one million tones of plastic raw materials per year.

Some of the Israeli manufacturers of plastic products established factories overseas in various

locations including in East European and South American countries (e.g. Romania, Russia

and Chile) in order to cut costs and better serve their clients from different parts of the world.

59http://www.isa.gov.il/Download/IsaFile_3359.pdf

128

For example, the Keter group, which is one of the biggest Israeli exporters of plastics

products, opened already 9 factories in Europe and 3 in the US.

The Israeli Plastic industry is also supported by the country's world- renowned academic

institutions. Research and development services are extended to the industry by leading

academic Institutions including the Technion Institute of Technology, the Hebrew University

of Jerusalem, Weizmann Institute, and the Shenkar College of Engineering and Design.

Overview of Petroleum Industry:

Natural history:

Petroleum is a naturally occurring liquid found in rock formations. It consists of a complex

mixture of hydrocarbons of various molecular weights, plus other organic compounds. It is

generally accepted that oil is formed mostly from the carbon rich remains of ancient plankton

after exposure to heat and pressure in the Earth's crust over hundreds of millions of years.

Over time, the decayed residue was covered by layers of mud and silt, sinking further down

into the Earth’s crust and preserved there between hot and pressured layers, gradually

transforming into oil reservoirs.

Petroleum, Latin for "rock oil," fuels 60 percent of all energy humans’ use. It also provides

the raw material for synthetic cloth, plastics, paint, ink, tires, drugs and medicines, and many

other products.

Petroleum's Commercial Beginnings

Although people knew of oil prior to 1850 and even had some uses for it, primarily as lamp

fuel, it was not a sought-after commodity. Oil bubbled to the surface in "seeps," and several

of these could be found along Oil Creek near Titusville, Pennsylvania. No one was able to

collect enough oil to make it an economically sound venture. Titusville resident Joel Angier

transacted the first petroleum lease in 1853 when he leased a portion of an Oil Creek seep

from a local saw mill. Although Angier's collection, like those before him, was not

economically viable, enough of his oil made it to commercial centers to pique interest in its

use and begin theories regarding its extraction. Downstream, farmer Hamilton McClintock

gathered enough oil from another seep to produce twenty or thirty forty-two-gallon barrels in

a season. His was the largest oil operation of its day, and it set the standard for measurement

of oil. Although forty-two-gallon barrels are no longer used, this is still the measurement used

129

for oil production. McClintock fielded some interest from an investment group from New

York and Connecticut, but his $7,000 asking price was deemed too exorbitant.

Transportation of Oil

Horses served as the primary means of transporting machinery to the oil field, as well as

carrying the product to refineries, in the early Pennsylvania oil fields. By 1865 horses had

been supplanted by the newly completed rail line, and tank cars, originally two open tubs,

were developed for rail transport. The first pipeline was developed in 1863, when Samuel

Van Syckle pumped crude through five miles of a two-inch pipe from the Pithole field in

western Pennsylvania to a railroad terminal. In the 1870s a six-inch pipeline ran from oil

fields to Williamsport, Pennsylvania, 130 miles away. Ten years later pipelines ran from

Pennsylvania to Cleveland, Buffalo, and New York City. At the end of the twentieth century,

the United States had over 1 million miles of oil pipeline in use. Most pipelines were buried,

with the exception to the 800-mile trans-Alaska pipeline, built partially above ground in the

1970s to prevent damaging the fragile permafrost.

Demand and Supply

Despite the conservation efforts of repeated administrations, national demand for petroleum

products continued to increase. As the twenty-first century began, the United States was

using 19.5 million barrels of petroleum per day—an average of three gallons per person. This

usage rate meant America's entire production of oil comprised only half its total

consumption. The other 50 percent came from all over the globe, half of it from other nations

in the Western hemisphere, 21 percent of it from the Middle East, 18 percent from Africa,

and the rest from elsewhere. Canada is the United States' largest supplier, followed in order

by Saudi Arabia, Venezuela, and Mexico. The United States uses more than one-quarter of

the world's oil production each year. Initially, when oil was extracted and refined for

widespread commercial use in the United States in the 1860s, national oil reserves increased

as new fields were discovered and better techniques for extracting and refining the oil were

implemented. However, the amount of available reserves plateaued in the 1960s and a decline

began in 1968. The discoveries in Alaska temporarily alleviated the decline, but the daily

output continued to drop from 9.6 million barrels daily in 1970 to nearly 6 million barrels per

day in 2002.

The hunt for oil continues. While Drake's original well came in at 69.5 feet, current U.S.

holes are on average one mile deep, and at least one is seven miles in depth. Once natural

pressure quits forcing the flow of oil up the well, an assembly of pipes and valves called a

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Christmas tree is used to pump additional oil out. Carbon dioxide and other gases, water or

chemicals are injected into the well to maintain pressure and increase production. U.S. fields

are among the world's oldest continually producing fields. By 2002, the Earth had yielded

160 billion barrels of oil, with an estimated 330 billion barrels left in the ground. Some

estimates suggest that at current production rates the world's proven oil reserves will last until

2050.

COMPARATIVE POSITION OF PETROLEUM INDUSTRY OF INDIA AND

ISRAEL60

• As per the data collected recently the Oil consumption of India is 3110.00 thousand

barrels per year.

• As per the data collected recently the Oil consumption of Israel is 235.00 thousand

barrels per year.

Plastic industry in Israel by 2011

x

60http://www.indexmundi.com/trade/exports/?section=2

131

The plastics industry manufactures polymer materials and offers services in plastics

important to a range of industries, including aerospace, building and construction, electronics,

packaging, and transportation.

From the above data we can say that Israel in plastic use in Israel there is 39% usage is

Packaging which is used in different types of product packing,20.6% plastic is used in

Building and construction which is half of the usage of packaging, there is 7.5% of plastic

usage in automotive sector,5.6% of plastic usage in Electric and electronics and rest of the

27.3% of plastic is used in other things.

Indian Plastic Industry

The Indian plastic industry has taken great strides. In the last few decades, the industry has

grown to the status of a leading sector in the country with a sizable base. The material is

gaining notable importance in different spheres of activity and the per capita consumption is

increasing at a fast pace. Continuous advancements and developments in polymer

technology, processing machineries, expertise, and cost effective manufacturing is fast

replacing the typical materials in different segments with plastics.

On the basis of value added, share of India's plastic products industry is about 0.5% of India's

GDP. The export of plastic products also yields about 1% of the country's exports. The sector

has a large presence of small scale companies in the industry, which account for more than

50% turnover of the industry and provides employment to an estimate of about 0.4 million

people in the country. Approximately Rs 100 billion are invested in the form of fixed assets

in the plastic processing industry.

Trends in Indian Export of Plastic Products :

132

India Plastic Products Exports FY 2011 US$ 531.6 mn:

PRESENT POSITION AND TREND OF BUSINESS (IMPORT/EXPORT) WITH

INDIA AND ISRAEL61

Overview of Israel’s Trade in Plastics:

In order to support its relatively big plastic industry, Israel imports various plastic raw

materials from numerous countries including the US, European countries, China,

Turkey,South Korea and India. Israel imports a variety of plastic raw materials including

thefollowing: Polymers of ethylene (HS3901), Polymers of propylene or of other Olefins

(HS3902), Polymers of styrene (HS3903), Polymers of vinyl chloride (HS3904), Acrylic

polymers (HS3906), Polyacetals, other polyethers& epoxide resins (HS3907), Polyamides

(HS3908) and more. Although, Israel mainly imports plastic raw materials (HS3901-3915

accounted for 64% of Israel’s total import of HS39 in 2008, US$ 1.435 billion out of the total

US$ 2.242 billion) it also imports to a lesser degree some plastic products (HS3916- 3926

accounted for 36% of Israel’s total import of HS39 in 2008, US$ 0.807 billion out of the total

US$ 2.242 billion).

61http://www.tradingeconomics.com/israel/gdp-per-capita-ppp

133

Israeli plastic companies export mostly to the US, Turkey and various Europeancountries and

mainly plastic products including the following: Tableware, kitchenware, other household

articles & toilet articles made of plastics (HS3924), Plates, sheets, film, foil and strip, of

plastics (HS3920 & HS3921), Articles for the conveyance or packing of goods made of

plastics e.g. stoppers, lids, caps and other closures of plastics (HS3923), Tubes, pipes and

hoses, and fittings (for example, joints, elbows, flanges) made of plastics (HS3917) and more.

Although, Israel mostly exports plastic products (HS3916-3926 accounted for 72.7% of

Israel’s total export of HS39 in 2008, US$ 1.862 billion out of the total US$ 2.563 billion) to

a lesser degree, it also exports some types of plastic raw materials (HS3901- 3915 accounts

for 27.3% of Israel’s total export of HS39 in 2008, US$ 0.701 billion out of the total US$

2.563 billion).

Israel’s Import of Plastics from India (major items by HS 4 digits) in millions of US$

HS 4

Digits Description 2007 2008

3901 Polymers of Ethelene 4.1 0.838

3902 Polymers of propylene or of other olefins 19.3 25.63

3903 Polymers of Styrene in primary forms 7.1 5.3

3907 Polyacetals, other polyethers& epoxide resins 20.5 34.54

3911

Petroleum resins, coumarone-indene resins,

polyterpepolysulphones, polysulphides. 0.034 0.371

3920

Other plates, sheets, film, foil and strip, of plastics,

non-cellular not reinforced, laminated, supported or

similarly combined other materials 4.36 4.14

3921 Other plates, sheets, film, foil and strip, of plastics 5.36 5.14

3923

Articles for the conveyance or packing of goods, of

plastics; stopplids, caps and other closures, of plastics. 0.639 0.252

3924

Tableware, kitchenware, other household articles &

toilet articles of plastics 0.331 0.224

3926 Other articles of plastics and articles of other materials 0.4 0.51

Overview of India-Israel Bilateral Trade:

Since the establishment of diplomatic relations between India and Israel in 1992, bilateral

134

trade and economic relations have progressed rapidly. From a base of US$ 200 million in

1992 (comprising primarily of diamonds), merchandise trade has diversified and has

increased sharply reaching over US$ 4 billion in 2008. During the months of January till

August 2009, the bilateral trade between India and Israel reached over US$ 1.72 billion.

(Source: Israel Central Bureau of Statistics, www.cbs.gov.il).

Overview of Israel’s Trade in Plastics

In order to support its relatively big plastic industry, Israel imports various plastic raw

materials from numerous countries including the US, European countries, China, Turkey,

South Korea and India. Israel imports a variety of plastic raw materials including the

following: Polymers of ethylene (HS3901), Polymers of propylene or of other Olefins

(HS3902), Polymers of styrene (HS3903), Polymers of vinyl chloride (HS3904),

Acrylic polymers (HS3906), Polyacetals, other polyethers& epoxide resins (HS3907),

Polyamides (HS3908) and more. Although, Israel mainly imports plastic raw materials

(HS3901-3915 accounted for 64% of Israel’s total import of HS39 in 2008, US$ 1.435 billion

out of the total US$ 2.242 billion) it also imports to a lesser degree some plastic products

(HS3916-3926 accounted for 36% of Israel’s total import of HS39 in 2008, US$ 0.807 billion

out of the total US$ 2.242 billion).

Policies and Norms of Israel for import / export 62

For Plastic Industry:

Marking, Labeling, and Packaging Requirements:

Israel has strict marking, labeling, and packaging requirements that frequently differ from

those of other countries. All imports into Israel must have a label indicating the country of

origin, the name and address of producer, the name and address of the Israeli importer, the

contents, and the weight or volume in metric units. In all instances, Hebrew must be used.

English may be included in the label, provided that the printed letters are no larger than those in

Hebrew.

Customs Duties on HS 39:

62http://www.exportvirginia.org/fast_facts/Current/FF_Issues_Foreign_Trade_Barriers.pdf

135

Plastics and Articles Thereof require customs duties ranging from 0% to 12%. While the

majority of Plastics Articles (products made of Plastics) require customs duties of 8%-12%,

Value Added Tax (V.A.T):

In Israel V.A.T is 16.5%, and is applicable on all sales.

For petroleum industry:

The Laws Governing the Israeli Oil and Gas Industry

The laws that apply to the oil and gas industry in Israel are found in the Israel Petroleum Law

(1952) and subsequent amendments and regulations. This law has been largely unchanged in

its almost 60 year history. The competent authority that grants licenses is, in most cases, the

Ministry of National Infrastructure while applications for petroleum rights are submitted to the

Petroleum Commissioner. The Law provides 3 types of rights, 2 relevant to the exploration

stage (including preliminary investigations, except for test drilling), and 1 for the production

phase. The rights that a license confers upon the licensee are as follows: the right to explore

for petroleum in a certain area (this puts the licensee in the position of a holder of a

preliminary permit) and the exclusive right to conduct test or development drilling in the area

and to produce petroleum there from. License must be obtained prior to drilling. Licenses are

granted subject to demonstrating capabilities such as financing ability, experience and

reputation. Given the recent developments, Israel has been more stringent in what companies

it gives licensing rights to, given the rapid increase in applications.

For Petroleum Industry:

Revised Foreign Direct Investment (FDI) Policy for the Petroleum 6

Natural Gas Sector effective from 1 April2011 as circulated by

Department of Industrial Policy 6 Promotion vide ‘Circular 1 of 2011’

dated 31.03.2011

5.2.19 Petroleum and Natural Gas Sector

5.2.19.1 Exploration activities of oil and natural gas 100% Automatic

fields. Infrastructure related to marketing of petroleum

products and natural gas, marketing of natural gas and

petroleum products, petroleum product pipelines. natural

gas/pipelines, L.NG Regassification infrastructure, market

100% Automatic

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study and formulation and Petroleum refining in the private

sector, subject to the existing sectoral policy and regulatory

framework in the oil marketing sector and the policy of the

Government on private participation in exploration of oil and

the discovered fields of national oil companies.

5.2.19.2 Petroleum refining by the Public Sector 49% Government

Undertaking (PSLJ), without any disinvestment or dilution of

domestic equity in existing PSUs.

49% Government

Present Trade barriers for import / Export of Israel63

A trade barrier is generally anything that makes trade difficult or even impossible. Examples of

trade barriers range from government-instituted tariffs to cultural preferences. Trade barriers

have a negative effect on exporters because they interfere with the normal supply and demand

and make international trade more complicated. They also negatively impact importers and

ultimately consumers since they interfere with competitive sourcing, which can result in higher

prices.

The global trend in recent years has been to eliminate as many trade barriers as possible.

Organizations like the World Trade Organization (WTO) have been established with the

purpose of limiting barriers and reconciling trade disputes among member nations. Free Trade

Agreements (FTAs) among countries, such as the North American Free Trade Agreement

(NAFTA), ASEAN in Asia, and the European Union customs union have reduced the number

of barriers involved in regional trade.

Conclusion

From above report we can say that India has a 13th times more petroleum consumption than

Israel and Indian export and import of petroleum is more than Israel. The plastic industry of

Israel is 46.4 million tonne in 2011, On the basis of value added; share of India's plastic

products industry is about 0.5% of India's GDP. India and Israel is not in the top 10 plastic

industry. The Indian plastic industry clearly has the potential to continue its fast growth, In

63http://importexporthomestudy.com/import-business/india-imports-2/

137

order to support its relatively big plastic industry, Israel imports various plastic raw

materials from numerous countries including the US, European countries, China, Turkey,

South Korea and India. The issue of terms of payment given by Indian suppliers was one of

the major issues raised by these Israeli importers Another issue raised by many of these

importers is the issue of long delays in the goods delivery Accordingly, the Ministry of

Commerce and Industry has been set up as the most important organ concerned with the

promotion and regulation of foreign trade in India The global trend in recent years has been to

eliminate as many trade barriers as possible In order to improve their competitiveness,

Israeli plastic companies recently began utilizing Nanotechnology In order to achieve

advantage in the global market of plastics, Israeli companies are always in the search for

new and innovative plastic materials.

138

:A Study of Tourism Industry:

Israel is a tourism based country and the major source of income is from the tourism industry.

Israel has much number of museums and has much more per capita income in the world

through this source. Israel has many religious places to visit such as Jerusalem with all its

attraction international sites such as Masada and unique natural sites like the Dead Sea.

Most popular sites for visitors:-

● Jerusalem

●Tel Aviv

●Eilat

● Tiberias

● The Dead Sea

● Several more historic cities (Acre, Nazareth, Safe, Jaffa) and seaside cities (Haifa, Netanya,

Herzliya, etc.)

India has a largest tourism industry with a contribution of 6.23% to8.78%. India has millions

of foreign visitors in the country every year. Most of the foreign visitors are from the

countries like USA and UK. There are many religious and historical places in India to visit

and many places are such where there is much cultural diversity and with that many different

cultures can be known.

There are many tourist places in India to visit them are as follows:-

• Rajasthan

• Kerala

• Jammu and Kashmir

• Maharashtra

• Madhya padres

ROLE OF TOURISM INDUSTRY IN ISRAEL AND INDIA.

Israel tourism industry 64The tourism industry is a growing industry in Israel. The Israel government is trying to

expand the growth of the tourism industry. The tourism industry is an upcoming sector in the

64 Travel and Tourism in Israel report retrived from http://www.euromonitor.com/travel-and-tourism-in-israel/report

139

future and due to that there are many opportunities in this sector and the government is trying

to grow in this sector slowly and gradually.

The growth of the industry depends upon the expansion in services that are to be provided to

the tourist and the government should look over those aspects very precisely and with the

help of that there would be expansion in the business of the country.

Israel needs to develop its tourism sector in such a manner that it can be a profitable source of

income for the country. The medical tourism plays an important role in the tourism sector of

Israel and it is also the most developing sector of the country. In 2006, 15,000 foreigners

travelled to the country for medical procedures, bringing in $40 million of revenue. Revenue

from tourism in 2009 totaled $ 3.3 billion. In 2010, tourism constituted 6.4% of the country's

GDP.

Advantages of medical tourism in Israel.

• Highly qualified medical professionals

• Sophisticated medical technology

• World class medical facilities

• Language

Disadvantages of medical tourism in Israel

• Prices are higher than in most Asian countries

• Political concerns

• Service levels at public hospitals

Israel has made arrangements and agreements with 65 countries whereby citizens from these

countries will no longer require a visa to enter Israel. The Israel government has provided

very easy entry procedure for the visitors to visit Israel and due to that the visitors are able to

get the required informant that they need regarding their concern very clearly and easily.

Thousands of medical travelers have visited Israel in the last few years to avail themselves of

the sophisticated healthcare and medical procedures that this country has to offer. In 2006,

approximately 15,000 foreign nationals entered the country specifically for various medical

treatments.

Role of Indian industry. 65The Indian tourism industry contributes a lot in the growing GDP of the country. The

tourism industry is expanding very fast and is contribution in the economy of the country a

65 Report on Indian Services Sector retrived from http://indiabudget.nic.in/es2010-11/echap-10.pdf

140

lot. The Indian tourism industry is also providing very effective and comfortable services to

the visitors who visit the country .The tourism industry can also be said as the important

source of income for the country and helps in growth of the economy.

The number of foreign tourists arriving from all over the world rose from 0.37 percent to 0.53

percent as has been stated by UN World Tourism Organization (UNWTO) in the year 2006.

This remarkable growth in the graph of tourism industry in India popularized the entire South

Asia as one of the most spectacular tourist terminal. Indian tourism industry contributes to

around 5.9 percent of the country's GDP and it provides employment to around 41.8 million

of inhabitants.

Tourism industry in India GDP has been listed below:

• The percentage of foreign tourists in India has increased by 12.4 percent in one year, that

is, from 2006 to 2007

• The foreign tourist’s arrival led to a robust growth in the foreign exchange earnings that

increased from USD 5.03 billion during January-October 2006 to 2007.

• The Indian tourism industry designed a wide spectrum of holiday packages and cheaper

airfares to attract more tourists.

• People traveling from India to abroad or states within India have increased by 25 %.

• (UNWTO) has estimated the outgoing tourists to reach around 50 million by the year 2020.

• India is most likely to set up forty hotels of global brands by 2011.

Development of tourism industry in Israel and India

The important aspects that are been taken into consideration for the development of tourism

industry in Israel. They are been mentioned below:-

• Sustainable tourism

• Human resources

• Co-operation with the tourism industry

• Development of a culture of evaluation

• Challenges for tourism policy

• International activities

The main government support channels of the country in Israel.

• The Israeli Ministry of Tourism is working to develop a unique and variegated

tourism product. This is the products such as hotels, investment in the

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development of major visitor attractions (archeological, religious, historical

and scenic) and development of tourism centers.

• The ministry is looking to consolidate Israel’s image as a tourist destination

worldwide.

• The ministry is working to facilitate access to Israel through the liberalization

of air transport policy, agreements with wholesalers and airlines, and removal

of administrative impediments such as the need for visas.

• The ministry holds courses on product and service quality for workers in the

various tourism sectors, in order to promote high standards.

• The ministry has prepared a strategic plan for sustainable development, which

is being implemented in stages.

DEVELOPMENT IN INDIA

The Indian tourism industry is also in its developing stage as because India is a developing

country and the development in the tourism industry is very rapidly increasing in India. The

development of the tourism industry is very much important for the countries growth and

expansion.

The tourism industry came into the economic structure of India tourism in a planned manner

in 1956 coinciding with the Second Five Year Plan. The approach has evolved from isolated

planning of single unit facilities in the Second and Third Five Year Plans. The Sixth Plan

marked the beginning of a new era when tourism began to be considered a major instrument

for social integration and economic development.

The situation changed after the 80’s that tourism activity gained momentum. The

Government took several significant steps. A National Policy on tourism was announced in

1982. Later in 1988, the National Committee on Tourism formulated a comprehensive plan

for achieving a sustainable growth in tourism. In 1992, a National Action Plan was prepared

and in 1996 the National Strategy for Promotion of Tourism was drafted.

The campaigns that are been formed for the tourism development are as follows:-

• Incredible India

• Visit India Year 2009

• Vibrant Gujarat

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Economic Impact on tourism industry in Israel and India

IMPACT ON ISRAEL

According to the World Travel and Tourism Council (WTTC), when you consider direct

travel and tourism industries as well as the impact of tourism on other sectors of the

economy, tourism accounts for nearly 10% of the world’s Gross Domestic Product (GDP),

almost $6 trillion, and employs close to 240 million people globally.

The effects of tourism are felt worldwide. In 2006, the WTO estimates, international Tourist

arrivals worldwide totaled 846 million people, an increase over 2005’s figure of 803 million.

In 2006, international tourist receipts totaled $733 billion worldwide, an increase from $676

billion in 2005.

Through direct and indirect industries, the tourism economy will contribute 217,000 jobs of

total employment in 2008. By 2018, this total should be 245,000 jobs. These figures indicate

that the tourism industry in Israel is thriving and will increasingly become a significant part

of the Israeli economy and a source of revenue.

IMPACT ON INDIA

POSITIVE IMPACTS

• Generating Income and Employment

• Source of Foreign Exchange Earnings

• Preservation of National Heritage and Environment

• Developing Infrastructure

• Promoting Peace and Stability

NEGATIVE IMPACTS

• Undesirable Social and Cultural Change

• Increase Tension and Hostility

• Creating a Sense of Antipathy

• Adverse Effects on Environment and Ecology

Factors Affecting Tourism to Israel

Israel’s tourism industry first reached significant levels and became a noteworthy factor in

Israel’s economy in the 1960s. In 1966 the number of international visitors exceeded 300,000

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tourists and by the end of the decade the number had surpassed 400,000. Writing in 1999

Yoel Mansfield identified six major cycles of tourism decline and recovery in Israel from

1966 through 1997.”32 The downward trends are almost entirely the results of wars,

terrorism and other violent conflicts that created either unsafe conditions for tourists or a

widespread perception of insecurity and had severe ramifications on the tourism industry

economically. Following these periods are recovery intervals in the tourism industry in which

tourist’s perceptions of security in Israel turned positive.

The varied tourist attractions and activities, as previously described, prove that Israel has the

potential to become a top tourist destination. Steady growth has not been possible, however,

because of interruptions in tourism due to perceived security issues. Thus, wars, incidences of

terrorism, and other periods of conflict can have devastating effects on the tourism industry in

Israel.

66STRUCTURE, FUNCTIONS, AND BUSINESS ACTIVITIES OF TOURISM

INDUSTRY IN ISRAEL AND INDIA.

ISRAEL

The structure of the tourism industry in Israel formed by the ministry of tourism is in a

systematic manner and the system. The system according to which the ministry has formed

for tourism industry is as follows.

The important departments that are to be taken into consideration from the Israel ministry are

as follows.

• The Tourism Marketing Department

• The Israel Tourism Services Department

• The Planning and Economics Department

• The Tourism Promotion Department

• The Articles Service

• The Tourism Information Center

INDIA

66 Ministry of Tourism, Israel retrieved from http://www.jewishvirtuallibrary.org/jsource/Politics/tourism.html

144

Structure of Tourism Industry of India is commonly held misconception is that tourism

industry is made up of little more than hotels and motels, but in reality, it is much larger than

that. However, a large part of tourism industry is a combination of Hospitality.

Information and Research studies suggest a bright future for Indian Tourism Industry in terms

of ‘economic activity’, like – according to ‘The Travel and Tourism Economic Research

2006’, Indian Travel & Tourism Industry is expected to grow by around 8% between 2007

and 2016 taking the generation of economic value to US$128 billion. But even after this

success of Indian Tourism Industry, it is not yet among the most competitive tourism

industries in the world and inspire of India emerging as a `must see' destination in recent

years Indian Tourism represents only 0.8% of world market-share which is negligible looking

at the potential it holds.

Rapid growth and lucrative incentives are attracting new players (especially foreign players

and Indian corporate) to this industry, and this is resulting in big structural changes and a

transition - from traditionally being a ‘mom and pop industry’ dominated by individually

owned SMEs and local / regional players, to the strong presence of ‘organized sector’ and

‘chains’ - is taking place.

Comparative position of tourism Israel with India

ISRAEL AND INDIA

The market in both the countries are different and according to that the comparative position

of both the countries are been known and according to that the future trends are been decided.

Israel is ranked 4th in the region, dropping 10 places to 46th overall. Israel benefits from its

cultural attributes, including a number of world heritage cultural sites. Israel offers a plethora

of historical and religious sites, beach resorts, archaeological tourism, heritage

tourism and ecotourism. Israel has the highest number of museums per capita in the world.

India is sending its people to get learning regarding the lie detectors and many other

instruments working process is been thought so that the people are able to know the working

of the equipments and can help in the use for their countries advancement.

Tourism industry is a growing industry in Israel major source of income in Israel is with the

help of its technological advancement with the help of which many people from different

countries visit them for learning purpose and for getting many other knowledge regarding

technical instruments. In India also the tourism industry is growing one and an important

145

source of income and it is also expanding technically as the Israel is been doing and with the

help of technology the future position of both the countries would be more powerful and

stable.

Comparative position of tourism industry with India and Gujarat

India is a country with rich culture and heritage and a large visitor attractions to boast of.

India's cultural Heritage and eco-tourism potential are the major consumer preferences of the

tourists, visiting India. Its Diversity attracts tourists both foreigners as well as its’ own

citizens, to explore scenic beauty that it has to offer the world. There is no other country in

the world which offers such wide choice of destinations Like India.

India has been ranked ninth by this study report. Tourism is the third largest net earner of

foreign exchange for the country and one of the sectors which Employs the largest number of

manpower. 67India’s tourism industry has also recorded phenomenal growth. The rate of international

arrivals in India in recent years has been to the tune of about 19 lakh arrivals per year. The

unprecedented growth in tourism in India has made it the third largest foreign exchange

earner after gem and jewellery and ready-made garments. This is not surprising since India

possesses a whole range of attractive normally sought by tourists and which includes natural

attractions like Landscapes, scenic beauty, mountains, wildlife, beaches, major rivers and

manmade attractions such as monuments, forts, palaces and havelis.

Gujarat has a preponderance of pilgrimage centres as in some other states. Somnath and

Dwarka - some of the well known and revered sites of ancient Hindu temples are situated in

the State. The temple architecture has reached heights of excellence in Jain temples at

Shetrunji, Girnar and Taranga. The temple of Ambaji situated in Aravalli range in North

Gujarat is an important religious centre for devotees in the country. Dakor, Pavagadh,

Bahucharaji, Shamlaji, Narayan Sarovar, Sudamas Porbandar, Kabirvad Shuklatirth,

Kayavarohan, Bhadrakali Temple Ahmedabad and Tankara - Maharshi Dayanand Saraswatis

birth place are also important pilgrimage destinations which have kept alive the religious

sentiments of the people. Lakhs of pilgrims visit these places every year.

There are a number of places of archaeological importance is such as the temple-town of

Palitana, Modhera with its Sun temple, historical Ranki Vav at Patan with relics of an ancient 67 Travel and tourism in India report retrieved from www.iittm.org/doc/IITTM_ITC_Report-2011-rev..pdf

146

capital, the Girnar Hills with Hindu and Jain temples, Junagadh with a historical fort, Dabhoi,

Champaner, Pavagadh, Shaking Minarets, Gandhi Ashram, Siddi Sayed Jali etc. These can be

developed by providing necessary infrastructural facilities and marketed as tourist

destinations to attract tourists.

The different types of tourism in Gujarat are as follows:-

• Heritage Tourism :

• Wildlife Tourism:

• Coastal and Beach Tourism:

• Tourism based on Traditional Art and Craft and Cultural Activities:

• Corporate Tourism:

• Adventure Tourism:-

• Highway Tourism:-

PRESENT POSITION OF IMPORT AND EXPORT IN ISRAEL

Source: www.tradingeconomics.com / israel central bureau of statistics

Israel reported a current account deficit equivalent to 318 Millions USD in the fourth quarter

of 2011. Poor in natural resources, Israel depends on imports of petroleum, coal, food, uncut

diamonds, other production inputs, and military equipment. Israel’s major exports are:

machinery and equipment, software, cut diamonds, agricultural products, chemicals, textiles

and apparel. Its main trading partners are The United States, European Union and Japan. This

page includes: Israel Current Account chart, historical data and news.

147

Source: www.tradingeconomics.com / israel central bureau of statistics

Israel exports were worth 3687 Million USD in February of 2012. Israel’s major exports are:

machinery and equipment, software, cut diamonds, agricultural products, chemicals, textiles

and apparel. Main export partners are United States, European Union, Hong Kong, India and

Turkey

Imports

Source: www.tradingeconomics.com / israel central bureau of statistics

PRESENT POSITION AND TREND OF BUSINESS {IMPORT- EXPORT} WITH

INDIA AND GUJARAT

There has been an upsurge of companies that provide competitive intelligence reports on

export import data India, as this has become an integral part of international business. This

export import India data is assembled, arranged and standardized on the basis of shipping

bills and import bills and then made available to the companies registered members on the

web.

148

In India, Gujarat has always been a pioneering state with all its initiatives in the process

towards economic development. It plays a pivotal role in terms of creating and enabling

atmosphere of entrepreneurship, giving incentives to transform entrepreneurial qualities into

development activities, thus, improving the economic status of the state as a whole. Gujarat, a

state with 5 crore people, has witnessed Gross State Domestic Product (GSDP) of Rs.

169,354 crore in 2005-06 at constant (19992000) prices. In the year 2004-05, the percentage

share of Gujarat in India's fixed capital investment was 16.98%, that in value of output was

15.59% and in net value added was 13.86% (Source: Statistical Information; Industries In

Gujarat, 2007).

Tourism Norms & Policies of Israel and India

ISRAEL TOURISM NORMS AND POLICIES

Tourism contributes some 2% to national GDP and just over 3% of total employment

counting only direct tourism jobs. In 2007, the combined total of direct and indirect tourism

jobs was some 140 000, 5% of total employees. Due to the importance of tourism, the

government appointed a special Ministry of Tourism Policy, marketing and development for

the tourism sector are handled by the Ministry, which is assisted by several subsidiaries in the

fields of building infrastructure, sites development and job training. In addition, in most areas

Israel there are local organizations promoting tourism.

Tourism-related policies

• Tourism legislation

• Hotels regulations

• Market trends analysis on domestic/inbound/outbound tourism

Authorities Involved in the Approval Procedure

• The Ministry of Tourism

• Israel Lands Administration

• Grants

• Restoration/conversion of buildings for hotel use

The export-import policy 1997-2002 carried forward the process of liberalization and

globalization set in motion by the process of economic reforms initiated since June, 1991.

These reforms had aimed at restructuring the Indian economy to increase the productivity and

149

competitiveness of foreign trade enterprises in order to achieve a higher rate of growth in

exports. It also enabled the foreign trade grow in an environment of liberalization from

licensing procedures, quantitative restrictions, discretionary bureau-critic controls and

cumbersome documentation procedures.

India Tourism Norms & Policies

Trade policy governs exports from and imports into a country. It is one of the various policy

instruments used by a country to attain her goals of economic development. This policy is

thus, formulated keeping in view, the national priorities for economic development and the

international commitments made by the country. It is essential that the entrepreneurs and the

export managers understand the trade policy as it provides the vital inputs for the formulation

of their business growth strategies.

In India, the legal framework for the regulation of foreign trade is mainly provided by the

Foreign Trade (Development and Regulation) Act, 1992, Garments Export Entitle-meant

Policy: 2000-2004, Export (Quality Control and Inspection) Act, 1963, Customs and Central

Excise Duties Drawback Rules, 1995, Foreign Exchange Management Act, 1999 and the

Customs and Central Excise Regulations. The main objective of the Foreign Trade

(Development and Regulation) Act is to provide for the development and regulation of foreign

trade by facilitating imports into, and augmenting exports from India.

The World Travel and Tourism Council (WTTC) have identified India as one of the foremost

growth centers in the world in the coming decade.

The Ministry of Tourism adopted a multi-pronged approach in order to achieve this growth.

Providing a congenial atmosphere for tourism development, strengthening the tourism

infrastructure and hospitality related services, integrated elements of identified destinations

and circuits, integrating elements of tourism, emphasizing on culture and clean civic life,

marketing of tourism products in a focused manner along with a branding exercise and

positioning India as a high value destination in the new key market, and giving thrust on the

human resource development activities have been the hallmarks of this strategy.

The important initiatives taken by the Government to improve the flow of foreign tourists

into the country and thereby increasing the county’s share in the world tourism included the

following:

• Direct approach to the consumers through Electronic and Print Media through the

“Incredible India” Campaign.

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• Creation of World Class Collaterals.

• Centralized Electronic Media Campaign.

• Direct co-operative marketing with tour operators and wholesalers overseas.

• Greater focus in the emerging markets particularly in the region of China, North East

Asia and South East Asia.

• Participation in Trade Fairs & Exhibitions.

• Use of Internet and Web Marketing.

• Generating tourist Publications.

Present Trade Barriers for Import/Export between Israel and India

One of the most commonly known non-tariff barriers is the prohibition or restrictions on

imports maintained through the import licensing requirements. Article XI of the GATT

Agreement requires Members not to impose any prohibitions or restrictions other than duties,

taxes or other charges, whether made effective through quotas, import or export licenses or

other measures.

Import restrictions on some items on grounds of safety and security are being maintained

generally by all the countries, and perhaps these cannot be considered as nontariff barriers

looking to the purpose for which the restrictions are imposed. Article XVIII (B) of the GATT

allows import restrictions to be maintained on grounds of ‘Balance of Payment’ (BOP)

problems.

India and Israel will further expand bilateral trade and investment relations building on the

respective strengths of the two economies. development of bilateral relations between the two

countries and said this was in continuation of the process started by the Israeli Prime Minister

Mr. Ehud Olmert’s visit to India in December 2004 when it was agreed to establish a Joint

Study Group to make recommendations on mechanisms and targets for expanding trade and

economic cooperation.

Business Opportunity in Future in Israel

There are many future opportunities in the tourism sector of Israel and according to that only

the work pattern and system of the industry changes. There are some important points that are

been taken into consideration.

• A prominent player in an industry marked by growth

• The bridge to customers - a consolidated enterprise

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• General economic trends

• Government Policy on Tourism Investment

Source: Israel central bureau of statistics; ministry of tourism – research and statistics

department

Gateways to Israel

The bulk of inbound tourism arrives through the new, modern Ben Groin Airport, which is

located in the center of the country, between Jerusalem and Tel Aviv. Eilat airport also

handles international flights, especially winter charters from Europe. Other gateways for

inbound tourism are the seaports of Haifa and Ashdod, as well as the land crossings: the

Jordan River and Taba (near Eilat).

Domestic Tourism

Domestic tourism shows every sign of thriving. Most Israeli families regularly go on

excursions throughout the country, using all accommodation types. There are thousands of

small businesses that produce and market home-made food, such as olives, cheeses, oil, wine,

breads and more, located mostly in the rural regions in the north and south of the country and

constituting tourist attractions, especially for domestic tourism. The stable domestic tourism

market has provided a “security net” for the tourism industry in years of crisis, compensating

to a great extent for the decrease in revenues from inbound tourism.

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Business Opportunity in Future in India

The future prospects according to which the government of India is estimating the future

growth of tourism industry in India.

• The demand for travel and tourism in India is expected to grow by 8.2 per cent

between 2010 and 2019 and will place India at the third position in the world.

• India's travel and tourism sector is expected to be the second largest employer in the

world, employing 40,037,000 by 2019.

• Capital investment in India's travel and tourism sector is expected to grow at 8.8 per

cent between 2010 and 2019.

• The report forecasts India to get capital investment worth US$ 94.5 billion in the

travel and tourism sector in 2019.India is projected to become the fifth fastest growing

business travel destination from 2010-2019 with an estimated real growth rate of 7.6

per cent.

Future trends

• The real GDP growth for travel and tourism economy is expected to be 0.2 per cent in

2009 and is expected to grow at an average of 7.7 per cent per annum in the coming decade.

• Earning through exports from international visitors and tourism goods are expected to

generate 6.0 per cent of total exports (nearly $16.9 billion) in 2009 and expected to increase

to US$ 51.4 billion in 2019.

• According to the Ministry of Tourism, Foreign Tourist Arrivals (FTAs) for the period

from January to March in 2009 was 1.461 million. For the month of March 2009 the FTAs

was 472000.The reason for the decline is attributed to the ongoing economic crisis.

• In spite of the short term and medium term impediment due to the global meltdown

the revenues from tourism is expected to increase by 42 per cent from 2007 to 2017.

CONCLUSION

Tourism is one of the most vital components contributing to the economy of the country.

Israel is one of the preferred destinations for tourism wherein the aspects of tourism range

from medical tourism to corporate tourism. India also ranks 4th in the tourism and Gujarat

government does a lot of endeavors in promoting Gujarat as a hub of tourist where in the

variety of tourism relates to various different types of tourism. Various campaigns like

vibrant Gujarat which a special initiative is taken by Gujarat chief minister for promoting

rapid industrialization in Gujarat. Business alliances with Gujarat police like forensic

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specialized area and lie- detectors, drip irrigation etc have come a long way in building the

technological advancement of the state.

Due to many external factors that are been affecting the country like terrorism attack that had

been on the chief minister of Israel then also the tourism industry was not affected and their

was no decline in the tourism industry of Israel . The tourism industry of Israel is in its

developing stage and the Indian tourism industry is much more advanced in this sector. The

Indian and Israel both the countries tourism industry are in developing stage and many factors

are affecting these industry. Though the industry are developed then also there are many

chances that are to be do in the structure of the industry so that it would help in the future

trends of these industry.

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Conclusions

Israel has a technologically advanced market economy. It depends on imports of crude oil,

grains, raw materials, and military equipment. The global financial crisis of 2008-09 spurred

a brief recession in Israel, but the country entered the crisis with solid fundamentals -

following years of prudent fiscal policy and a series of liberalizing reforms - and a resilient

banking sector, and the economy has shown signs of an early recovery. The U.S. is Israel's

largest single country trade partner. Since signing a Free Trade Agreement in 1985, Israel–

US trade has grown eight-fold. Since 1995 nearly all trade tariffs between the U.S. and Israel

have been eliminated.

The economy of Israel is a technologically advanced market economy, including a rapidly-

developing high-tech and service sectors. As of 2010, Israel has the 24th largest economy in

the world, and ranks 15th among 169 world nations on the UN's Human Development Index,

which places it in the category of "Very Highly Developed".

The major industrial sectors include metal products, electronic and biomedical equipment,

processed foods, chemicals, and transport equipment. Israel diamond industry is one of the

world's centers for diamond cutting and polishing. Israel has a diversified and technologically

advanced economy. The agricultural sector employs 2% of the population and the country's

main crops are fruits and vegetables, cereals, wine and cattle farming.

The country is self-sufficient in food production, with the exception of cereals. Israel is the

country which invests the most in research and development (4.8% of the GDP) in the world.

The country has a highly qualified manpower, particularly in engineering. The country is

ranked 2nd place in world, with regard to availability of venture capital. The government

provides the necessary support to entrepreneurs.

Israel is a very good partner to do trade and commerce.

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