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When Mumbai wakes up, the confusion is terrible. The same is true of
New Delhi, the capital of India, in the high-tech capital Bangalore,
and a four-hour trip to Agra, where the beautiful Taj Mahal is located.
Uneducated poor people are not counted in India's unemployment rate,
a local guide tells us. Indians are proud of being the world's
largest democracy and one of the world's most exciting economies.
Following economic reform, which began in 1991, India has enjoyed very
rapid economic growth, 6-8% a year, in recent years. The main cause has
been a revolution in information services and technologies, which has
led to 40% annual growth in technological industries.
The pace at which India is turning out engineers poses a threat to the
entire Western world, as well as Israel. Cooperating with India and
participating in its revolution is clearly worthwhile. Indian software
engineers earn less than half as much as Israeli software engineers,
who average $100,000 a year.
Arranging benefits
The delegation that left for India Sunday night last week returned
early, so that Minister of Industry, Trade, and Labor Ehud Olmert could
vote at the last minute at the Likud convention on Thursday night.
Minister of Finance Benjamin Netanyahu canceled his participation in
the delegation at the last minute because of the political crisis. It
seems that Indians are well aware of the situation in Israel. Olmert
met with seven Indian government ministers over three days, including
the ministers of agriculture, communications, industry, finance, and
political affairs (in the prime minister's office). All the Indian
ministers mentioned opposition leader MK Shimon Peres (Labor), and
expressed interest in a future coalition, and in the probability that
disengagement would be carried out.
Both during the delegation's stay in India last week, as well as this
week, it was reported that a number of Israeli companies were setting
up factories in India (Delta Galil Industries (Nasdaq: DELT; TASE:
DELT) and Soltam Systems) or moving their headquarters there (LID,
owned by David Elishayov, brother-in-law of Lev Leviev). The Israeli
investments demonstrate India's potential, but also its threat.
Israeli manufacturers say that the threat cannot be stopped; all that
can be done is to deal with it, and try to benefit from its results.
Olmert and Chief Scientist Dr. Eli Opper noted that the limitations of
the R&D budget were jeopardizing the fulfillment of Israel's R&D
potential. According to Olmert, India "is an example of the danger
that threatens us. It is therefore important to sign a bilateral
agreement with India, and to cooperate with it." During his visit, he
agreed with Indian Minister of Commerce and Industry Shri Kamal Nath to
begin negotiations for economic cooperation between Israel and India.
The negotiations, scheduled for mid-2005, are expected to include more
intensive economic cooperation, R&D cooperation, and possibly also
reduced customs duties on categories of Israeli products. Israel will
specifically ask for a cut in the current 5% customs duties on Israeli
diamond exports. Nath predicted that the agreement would boost
bilateral trade between the two countries to $5 billion within three
years.
Fear of relocation
Hermoni adds, "These deals are now easier than in the past, following
the rapid change in the Indian environment and economic structure.
There is now less cronyism, and more openness to foreign companies."
Baptism by fire
An unassuming personality