normalization and after 255de cade and is now close to four billion. This massive increase in just over
a de cade is phenomenal and unpre ce dented. By the end of the 1990s, Is-
rael emerged as India’s fourth- largest trading partner in the wider Mid-
dle East. It trades more with Israel than with Egypt, with whom it has
had close po liti cal ties since early 1950. In some years, the volume of trade
with Israel has been larger than its trade with Iran. Such rapid growth
makes Israel one of India’s top twenty trading partners in the world and
among the top fi ve in the Middle East.
Economic relations should not be mea sured merely by trade. Both
countries are engaged in a host of joint ventures in agriculture, water
management, and horticulture whose true value and importance cannot
be quantifi ed in dollars. Despite economic liberalization and globaliza-
tion, the Indian economy continues to be heavily dependent upon agri-
culture. Thus Israeli expertise in the production of high- yield crops and
irrigation systems has been sought by various state governments, who
face the perennial problem of drought and water shortages. Expertise on
arid- land management is another area that is attractive for states such as
Rajasthan.
A third area of economic cooperation is investment. A number of In-
dian and Israeli companies have invested in one another. Since 1992,
Israel has emerged as one of the largest players in India’s foreign direct
investments sector. Israeli companies are actively investing in areas such
as irrigation equipment, medicine, and textiles, and lately have entered
into the booming construction industry. Various business forums such
as the Confederation of Indian Industries (CII) and the Federation of In-
dian Chambers of Commerce and Industry (FICCI) have ongoing arrange-
ments with their Israeli counterparts and or ga nize regular trade visits by
leading businesspeople. According to one estimate, as many as 150 bilateral
agreements were signed during the fi rst fi fteen years of normalization.^51
Economic relations, unfortunately, have a fl ip side, and the rosy trade
picture hides certain uncomfortable facts. Indo- Israeli trade is largely a
single- commodity trade, namely diamonds. India imports uncut dia-
monds and precious and semiprecious stones and re- exports them to Is-
rael as a fi nished product. This segment constitutes about two- thirds of
the total bilateral trade. As table 12.1 indicates, during 1996 to 2006, the
diamond trade accounted for between 52 and 71 percent of the total trade.
It is true that India’s trade with other Middle Eastern countries is also a
single- commodity trade, namely, energy. However, there is one notable