By David Wainer
(Bloomberg) — Indian authorities pulled out the stops during Israeli Prime Minister Benjamin Netanyahu’s visit this week: His counterpart Narendra Modi showed up unexpectedly to greet him on the tarmac. At a dusty backwater in Modi’s home state, children waved Star of David flags and sang in Hebrew. Farmers praised Israeli technology, and posters and billboards bearing the Israeli prime minister’s likeness were plastered on roads.
Netanyahu’s first state visit to India, capping a year in which he assiduously courted the Asian giant, was brimming with positive optics and lavish compliments. Behind the scenes, however, officials are laboring to sweep away significant obstacles to the more flourishing trade both countries want.
Since 2010, Israel and India have been negotiating a free-trade agreement intended to lower barriers for Israeli goods in exchange for better access for Indian workers in Israel. India’s bureaucratic maze makes it hard to reach a deal quickly, according to a senior Israeli government official, who spoke on condition of anonymity because talks are ongoing. An Indian delegation is scheduled to arrive in Israel next month for more talks, he said.
An Indian diplomat, speaking on condition of anonymity to discuss confidential talks, said India is taking a renewed look at all its free trade accords, complicating the negotiations with Israel. Bilateral trade topped $5 billion last year, and Netanyahu and Modi repeatedly spoke of their desire for more.
“Getting to a free-trade deal is the focus of our efforts to boost economic ties with India,” said Ohad Cohen, head of the Foreign Trade Administration at Israel’s Economy Ministry. While Israel has many free-trade pacts around the world, he said, India’s are mainly focused in Asia.
Driving the growing ties is Netanyahu and Modi’s shared worldview as national-security hawks and free-market proponents. Both see Israel’s technology-oriented economy as a natural fit for India’s, which needs innovation to improve everything from farming to healthcare.
In a remote farming village in Gujarat, Netanyahu and Modi visited an agricultural training center where locals learn Israeli water-conservation and energy-efficiency techniques. Israel has such agricultural centers around the world, but India — with more than 30 — hosts more than any other country.
Military deals underpin the economic relationship, and Israeli officials said on this trip they’d revived a scuttled deal to sell missiles to India. No explanation was given for India’s about-face, and it wasn’t clear if the the revived deal would still be worth $500 million.
The growing ties have yet to produce Indian support where Israel wants it most — at the UN and other international fora. Netanyahu expressed disappointment that India supported a UN General Assembly resolution last month blasting U.S. recognition of Jerusalem as Israel’s capital, but said it wouldn’t impede closer ties.
One hurdle to trade is the circuitous flight between the countries. Direct flights have to circumvent countries to Israel’s east that don’t have official relations with the Jewish state, so it takes more than nine hours to fly the 4,000 kilometers (2,500 miles) from Tel Aviv to Mumbai. With Israel’s still-clandestine relations with Saudi Arabia improving, Netanyahu told a group of businesspeople in Mumbai that Israel is working on a “simple, direct flight” to India.
Netanyahu brought some 130 business leaders to India, which his office said was the biggest delegation an Israeli leader has ever taken abroad. Modi reciprocated with warm embraces, feting Netanyahu with traditional dancers in peacock feathers during a visit to Agra, where the Taj Mahal mausoleum was closed to tourists so Netanyahu and his wife could have a private visit.
“We have a clear message coming down from both leaders that they want to bring our countries closer together,” said Anju Kumar, deputy ambassador from India to Israel. “There’s a number of issues we need to work on. We are working on it.”
On his last night in Mumbai, Netanyahu partied with Bollywood royalty such as actor Amitabh Bachchan and director Abhishek Kapoor. Once the festivities are finished, it will be time to get down to details.
“Both sides understand that the real work will begin next week, when we get back from this trip,” Israel Foreign Ministry Director-General Yuval Rotem said. “We are engaging on all fronts, beyond the military and diplomacy. We are creating links in the movie industry, oil and gas, cyber and more.”
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