Expert view: A happy new trading couple: India and Israel

The newspaper headlines seemed very familiar: rapidly increasing inflation, a government facing an uncertain political future, and heavy flooding causing chaos in various parts of the country.

However, on this occasion, I was not perusing The Guardian or the FT, but The Times of India and The Business Standard and, despite the undoubted challenges which India faces - particularly its lack of infrastructure, its huge wealth disparity and an annual inflation rate of 13 per cent - the country's economy is still forecast to grow this year by eight per cent. There is also an interesting sub-text to this story: the burgeoning economic ties between India and Israel.

I was in New Delhi to attend the Israel-India Forum organised by the Confederation of Indian Industry (CII) and the Harold Hartog School of Government and Policy of Tel Aviv University. Although full diplomatic relations were only established between the countries in 1992, bilateral trade has grown to more than £2bn - and is expected to increase to more than £7bn in four years if the countries enter into a free-trade agreement now on the agenda.

Israeli companies are investing heavily in technology, real estate, private hospitals, dairy farms and irrigation, as well as in the more traditional sectors of diamonds and defence. According to recent reports, after Russia, Israel is India's largest supplier of defence equipment. Nor is it all one-way traffic. Tata Consultancy Services has established operations in Israel, as has the State Bank of India, while Sun Pharmaceuticals is in the process of taking over Taro Pharmaceuticals, a US company with a large Israeli operation.

The most significant point about the India-Israel Forum was not the high-level business delegation attending from Israel but the leading Indian businessmen who participated, including government ministers, the chairmen of Ranbaxy, representatives of Tata Communications and Apollo Hospitals, and the editor of The Business Standard. The message from the Indian politicians and businessmen was clear: India is eager to do more business with Israel - very good news for both countries.

Jonathan Morris is a partner at Berwin Leighton Paisner LLP. This regular slot features views from experts in their field

    Last updated: 2:29pm, September 18 2008