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New Delhi
: New Delhi: Talks on a free trade agreement (FTA) between Israel and India have been disrupted due to the war in Gaza, two people with knowledge of the matter said. Peppermint. One of the people cited above, requesting anonymity, said the war triggered by the Hamas attack on Israel on October 7, 2023, has taken away much of the focus of India-Israel relations.
“This has become a major hindrance to the regular pace of negotiations (on a free trade agreement) between the negotiating teams,” the person said.
The second person also said on the condition of anonymity that normalcy in FTA talks between Israel and India is expected only after the war subsides.
Spokespeople for the foreign and commerce ministries and the Israel Embassy did not respond to emailed queries.
India is Israel’s 10th largest trading partner, and the third largest in Asia after China and Hong Kong. Bilateral trade was estimated at around $12 billion in FY23.
An immediate consequence of the war has been the trade in diamonds, which accounts for more than half of bilateral trade in value terms.
India’s Gems and Jewelery Export Promotion Council (GJEPC) has expressed concern over the escalating Israel-Hamas conflict.
India buys rough diamonds from Israel, which it polishes and sells back. Certainly, Indian exports of diamonds were already declining in FY2014 due to the slowdown in the US market and supply constraints when the war broke out.
However, Colin Shah, former chairman of GJEPC and MD of Cama Jewellery, said diamond exports from India have not really been impacted much as customers are now buying diamonds from Dubai or Antwerp, where most of the Indian diamond consignments are coming from. Is.
He said that there is zero duty on diamonds in Israel, an FTA with Israel would be more beneficial in trade of other commodities than diamonds.
Negotiations on an FTA between Israel and India have progressed slowly since they began in 2010. Key issues included the Indian demand to allow movement of Indian IT professionals to Israel.
Furthermore, the Indian side has expressed concern that given the mismatch in the size of the two economies, Israel is likely to benefit far more from the FTA.
But in May 2023, Israel’s Foreign Minister Eli Cohen pushed forward with the FTA, saying the trade agreement was necessary to strengthen economic ties.
“The scope for trade opportunities between our countries is enormous and there is a strong desire to finalize an FTA that will hopefully further strengthen our economic ties,” Cohen said. Major Indian exports to Israel include cut and unpolished diamonds, electronics and telecommunication components. And diesel.
Major imports from Israel include pearls and precious stones, chemical and mineral/fertilizer products, machinery and electrical equipment, petroleum oil, defence, machinery and transport equipment.
According to commerce ministry data, Indian exports to Israel stood at $3.51 billion during the April-November 2023 period, compared to $4.54 billion during the same period last year.
Israel’s military operation in Gaza has created other challenges for India. Diplomatically, India will have to balance its relations between Israel and its allies in the Arab world. The crisis could impact ambitious connectivity initiatives like the India Middle East Economic Corridor, which will link India to Europe in the Middle East and beyond.
Meanwhile, attacks on global shipping by Yemen’s Houthi militants, fueled by Israel’s military actions, have also threatened vital Red Sea trade routes.
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