India\'s Israel Policy - P. R. Kumaraswamy

256 n ormalization and after

diff erence: energy- related trade benefi ts both India and the supplier
countries. The principal benefi ciaries of the diamond trade are a group of
Indian business families who are settled in Israel and operate from the
Diamond Exchange in Ramat Gan. They “export” uncut diamonds and
stones to their family companies in India and, upon polishing and value
addition, these goods, often supplied through credit arrangements, are
“imported” into Israel. Their true value addition is thus marginal.
Real progress in bilateral relations, however, is happening in an arena
that neither side is willing to discuss: defense cooperation.

Defense Ties

In just over a de cade, Israel has emerged as a major player in
India’s defense and security calculations.^52 It has become the second-
largest defense supplier to India after Rus sia,^53 and India has emerged as
the largest export destination for Israeli arms. Though primarily revolv-
ing around the air force, the bilateral- defense ties include other areas,

table 12.1
India’s trade with Israel and the share of diamond trade (in million US$)

Year Total
imports

Diamond

imports

Tot a l

exports

Diamond

exports

Tot a l

trade

Share of

diamond

trade (%)

1996–1997 260.69 175.55 211.41 123.39 472.10 63.32

1997–1998 335.63 196.37 353.24 197.36 751.24 52.41
1998–1999 350.27 217.22 355.21 216.70 705.48 61.51
1999–2000 581.94 424.38 499.70 344.13 1081.64 71.05
2000–2001 432.48 299.51 472.29 273.75 904.77 63.36
2001 –2002 427.75 246.69 428.02 257.7 7 855.7 7 58.95
2002–2003 602.68 329.01 634.54 412.80 1237.22 59.96
2003–2004 669.76 399.16 723.98 477.03 1393.74 62.87
2004–2005 988.11 547.09 1005.76 698.00 1993.87 62.45
2005–2006 1031.19 576.30 1201.50 814.21 2232.69 62.28
2006–2007 1088.57 497.83 1320.39 875.33 2399.24 57.23

Source: Adapted from Export- Import Data Bank, Director General of Foreign Trade, New
D e l h i , h t t p : / / d g f t. d e l h i. n i c. i n.