735 Israle 6

A
GLOBAL / COUNTRY STUDY AND REPORT

On
ISRAEL
Submitted to
Gujarat Technological University

Submitted by
N. R. Institute Of Business Management, Ahmedabad
IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
[Batch: 2011-13]
MBA SEMESTER IV
Under the Guidance of

Prof. Rajsee Joshi
Prof. Amish Soni
Prof. Prashant Pareek
N.R Institute of Business Management

MBA PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad
April, 2013
PREFACE
As a part of the course curriculum, Second Year M.B.A. students have to undergo Global
Country Report, which is designed keeping the prerogative and preferences of corporate field
in mind. It is aimed to give students an international exposure in various spheres and let them
gain a thorough understanding of a country and its comparison with Indian standards. Also
the main objective of preparing such a project report is to aid the students explore the
management subjects from a practical viewpoint.
This Global Country Report covers ISRAEL as a country under study is submitted to N.R.
Institute of Business Management as a part of M.B.A Course from Gujarat Technological
University. It is the presentation of our learning during the study. During the study we
analysed the country as a whole with various analytical tools. We have also analysed various
sectors and have done a broad country comparison with India.
The Country Report mirrors the team work of students and is intended to be a useful
reference for all readers and researchers.
ACKNOWLEDGEMENT
First and foremost we would like to acknowledge N. R. Institute of Business Management
(NRIBM), Gujarat Technological University (GTU) for offering this golden to undertake
such a project report. Through this project we have gained significant insights about the
international arena and have been able to correlate our management subjects with it.
It gives us the immense pleasure to present this Global Country Report on Israel. The
submission of this Report gives us an to convey our gratitude to all those people whose
helping hands and guidance have made this project possible.
We sincerely express our thanks to our Director, Dr. Hitesh Ruparel for providing such an
informative platform for learning.
We express our deepest gratitude to our faculty guides, Prof. Rajsee Joshi, Prof. Amish Soni
and Prof. Prashant Pareek for their invaluable inputs, guidance and moral support.
We also thank everyone of the student fraternity who has participated in this project and
applaud the team spirit and co-operation of all the students involved with the Country Report.
We acknowledge and thank all those people who have directly or indirectly have extended a
helping hand and without whose kind support and co-operation, this project would not have
seen the light of the day.
II
Sr. No.
Topic
Page No.
Preface
Acknowledgement
II
Summary of 3rd SEM

1
Defence Industry
1.1Introduction
1.2Major Players in the Defence Industry in Israel
1.3Present Trade : Israel
1.4Defence Technology
1.5Resources
1.6Legal system
1.7Products & Services offered by players in India
1.8Barriers to Entry in Indian Defence Industry
1.9Present Trade: India
1.10 Technology Advancement in India
1.11Comparison of Defence Industry of Israel & India
1.12Comaprison of Defence firms
1.13Opportunity
12
Electronic Industry
15
2.1Introduction
16
2.2Electronic Industry in Israel
16
2.3Trade Policy : Israel
19
2.4STrade Policy: India
20
2.5Legal Aspects to Electronic Industry
22
2.6 Present Trade: Israel
23
2.7 Present Trade: India
24
2.8 Technological Scenario
25
2.9 Patterns of Corporate Investment: Israel
28
2.10Requirements
2.10
2.11 Investment Climate in Israel
30
2.12 Opportunities
33
Tourism Industry
42
III
3.1Introduction
43
3.2Legal Factors
46
3.3WTO
47
3.4Economic Factors
47
3.5Social Factors
48
3.6Technological Factors
49
3.7 Environmental Factors
50
3.8Resources
50
3.9 Investment Climate in Israel
51
3.10 Opportunities
54
Diamond Industry
56
4.1Introduction
57
4.2Diamond Industry of Israel
58
4.3Companies of the Diamond Industry
58
4.4Financial Comparison of Companies
60
4.5 WTO Trade Policy
63
4.6Diamond Technology
64
4.7Resources
65
4.8 Opportunities
66
Chemical Industry
67
5.1Introduction
68
5.2Major Companies and Products
68
5.3Present Trade
70
5.4WTO Trade Policy
70
5.5Legal Aspects
71
5.6 Present Trade Policy
72
5.7 Technology
72
5.8 Prevaling Investment Pattern in Israel
72
5.9 Resources
73
5.10 Comparison of India and Israel
74
5.11 Barriers for Indian Companies
77
5.12 Opportunities
80
IV
Communication Industry
83
6.1Introduction
84
6.2Products/Services
85
6.3Key Players
88
6.4Indias Communication Industry
89
6.5Products/Services of Communication Industry
89
6.6 Major Companies in India
93
6.7 Opportunities
98
Agriculture Industry
100
7.1Introduction
101
7.2Major Players in Israel
104
7.3Industry in India
104
7.4 Major players in India
105
7.5Exports & Imports
105
7.6WTO Trade Policy
106
7.7Present Trade Policy
107
7.8Technology
108
7.9 Resources
109
7.10PEST Analysis
110
7.11 Comparative Analysis of Companies
111
7.12 Opportunities
116
Banking Sector
119
8.1 Introduction
120
8.2 Major Players of Israel
121
8.3Products/Services offered by companies in Israel
122
8.4 Present Trade:Israel
123
8.5 Technology: Israel
124
8.6 Resources
124
8.7 Products/Services offered by companies in India
126
8.8 Present Trade:India
127
8.9 Technology: India
128
8.10 Comparison of Israel & India
129
10
8.11 Opportunities
131
Information Technology Sector
135
9.1 Introduction
136
9.2 Political Factors
143
9.3 Economic Factors
143
9.4 Social Factors
143
9.5 Technology Factors
144
9.6 Legal Factors
144
9.7 Environmental Factors
144
9.8 Opportunities
146
Power & Energy Sector
152
10.1 Introduction
153
10.2 PESTEL Analysis of Oil & Gas Sector
156
10.3 Comparative Analysis Of Israel and India
164
10.4 Process of E&P Activities
166
10.5 Company Case Study
168
10.6 Opportunities
173
Conclusion
175
Bibliography
179
VI
LIST OF TABLES
Table No.
Content
Page No
1.1
Comparison of Defence Industry in 8

Israel & India
1.2
Comparison of Defence Firms
10
1.3
Gap Analysis
13
2.1
Israel
Condition
of
Electronic 30
Components
2.2
Tax Benefits in Israel
36
2.3
Feasibility Study of Israel
40
4.1
Trade Statistics Diamond Industry
63
5.1
Overall Comparison: India vs Israel
73
5.2
Comparison of Companies in Chemical 77

Industry: India vs Israel
6.1
M&A : Communication Industry
87
6.2
Industry Comparison : India vs Israel
88
6.3
CompanyComparison1: India vs Israel
95
6.4
96
6.5
97
7.1
Export of Israel to India in 2011
105
7.2
Imports of Israel to India in 2011
106
8.1
Major Players in Banking Industry: 122

Israel
8.2
Comparison of Industry: Israel vs 129

India
10.2
PESTEL Analysis of Oil & Gas Sector
10.3
Comparative Analysis: India vs Israel 164
VII
156
EXECUTIVE SUMMARY
rd
of 3 SEMESTER
VIII
3rd SEMESTER
POLITICAL FACTORS
History
Palestine, deliberated a holy land by Jews, Muslims, and Christians, and homeland of the
modern state of Israel, known as Canaan to the ancient Hebrews. Palestine's finds its roots in
the Barbarians, a people who occupied the southern shoreline part of the country in the 12th
century B.C.A Hebrew kingdom established in 1000 B.C. was later divided into the
kingdoms of Judah and Israel; they were afterward invaded by Assyrians, Babylonians,
Egyptians, Persians, Romans, and Alexander the Great of Macedonia. Palestine became a
midpoint of Christian pilgrimage after the emperor Constantine converted to that reliance.
Since then, Israel has always been a bone of contention in the middle-east and in the thick all
major issues that have rocked the region over the past. The dispute of the gaza strip however
holds the supreme positions among all others. Jerusalems significance from the religious
point of view for the Jews, Christians and muslims has been the trigger for most of the
political volatility in the region, especially Israel.S
Israel:
Government type: Parliamentary democracy
Capital: Jerusalem
Geographic coordinates: 31 46 N, 35 14 E
Time difference: UTC+2
POLITICAL FRAMEWORK: ISRAEL

Israel functions under a parliamentary system as a democratic republic with worldwide
suffrage. A member of parliament supported by a parliamentary majority becomes
the prime ministerusually this is the chair of the major party.
The prime minister is the head of government and head of the cabinet. Israel is governed by
a 120-member parliament, identified as the Knesset. Membership of the Knesset is based
on comparative demonstration of political parties, with a 2% electoral brink, which in
practice has resulted in coalition governments.
Parliamentary elections are scheduled every four years, but unstable coalitions or a noconfidence vote by the Knesset can melt a government earlier. The Basic Laws of
Israel function as an uncodified constitution.
3
In 2003, the Knesset originated to draft an official constitution based on these laws.
The president of Israel is head of state, with limited and mostly ceremonial duties.
Political conditions
From the founding of Israel in 1948 until the election of May 1977, Israel was ruled by
successive coalition governments led by the Employment Arrangement (or Mapai prior to
1967). From 1967 to 1970, a national unity government involved all of Israel's parties
except for the two parties of the Communist Party of Israel.
After the 1977 election, the Pragmatic Zionist Likud bloc (then composed of Herut, the
Liberals, and the smaller La'am Party) came to power, forming a coalition with the National
Religious Party, Agudat Israel, and with others.
In 2009 the Israeli Central Election Committee initially banned the two main Arab political
parties (the National Democratic Assembly (also known as Balad) and Ra'am-Ta'al) from
challenging the next election for secondary terrorism and failing to distinguish Israel as a
democratic Jewish state, but the Supreme Court of Israel inverted this decision.
Prime Ministers and governments since 1996

1. Netanyahu (19961999)
2. Barak (19992001)
3. Sharon (20012006)
4. Olmert (20062009)
5. Netanyahu (2009present)
Political Parties:
The four parties creation up National Union had six seats in the preceding elections in the
combined National UnionNational Spiritual Party slate. The Ahi party (2 seats) left the National
Union and joined the Likud.
The Jewish Home (formerly the National Religious Party) had three seats in the joint National
UnionNational Spiritual Party slate. The two parties together won 7 seats in this election for a net
loss of 2.
1. Political right
2. Political left
3. Political center
4
4. Interest groups
5. Others
Political matters
Major issues in Israeli political life include:
The Israeli-Palestinian conflict and Arab-Israeli conflict
The relationships between Jewish religious factions
The nature of the state of Israel; (e.g. the ways in which it should signify Judaism and
denote secular democracy)
The economy, and matters of social significance.
Geography :
Location:
Middle East, nearby the Mediterranean Sea, mid Egypt and Lebanon
Area:
20,770 kms
Land boundaries:
Total: 1,017 kms
Border countries: Egypt 266 kms, Gaza Strip 51 kms, Jordan 238 kms, Lebanon 79 kms,
Syria 76 kms, West Bank 307 kms
Coastline: 273 kms
Maritime claims:
Territorial sea: 12 nm
Continental shelf: to depth of exploitation
Climate:
Temperate; warm and dry in southern and eastern desert areas
Natural resources:
Timber, potash, copper ore, natural gas, phosphate rock, magnesium bromide, clays,
sand
Land use:
5
Arable land: 15.45%

Permanent crops: 3.88%
Other: 80.67%
Freshwater withdrawal (domestic/industrial/agricultural):
Total: 2.05 cu km/yr (31%/7%/62%)
ECONOMIC FACTORS
Israel is the country located in the Middle East surrounded by Syria, Palestine, and
Jordan.
The official language of Israel is Hebrew and Arabic.
The population of Israel is approximately 7.8 million of which almost 80 % of the

population comprises of Jews while non-Jewish citizens mostly Arabs constitute the
rest.
Jerusalem, Tel Aviv, Haifa and BeerSheva are the prominent cities in Israel
The economy of Israel is known for its technically advanced and rapidly developing
high-tech market. Amongst all the 187 nations of the UNs Homan Development
Index, Israels rank is 17th in category of Very Highly Developed Country in 2011.
The major industrial sectors are the metal products, processed foods, electronic and
biomedical equipment, chemicals and transport equipment.
ECONOMY OF ISRAEL
Rank
50th (PPP) / 39th (nominal)
Currency
Israeli new shekel (NIS)
Fiscal year
Calendar year
Trade organisations
BIS, EBRD, ICC, IADB, ISO,ITUC, CLS, OECD, UN

economic bodies,WCO, WTO, WFTU.
Population below poverty line
19.9% (2008)
Gini coefficient
39.2 (2008)
Rank in the world
(69th)
Labour force
3.227 million (2011 est.)
Rank in the world
(100th)
Labour force by occupation
agriculture: 2%,
industry: 16%,
services: 82% (September 2008)
Unemployment
5.6% (2011 est.)
Rank in the world
(56th)
Ease of doing bussiness Rank
34th (2012)
TABLE 1.1
SOME STATISTICS
OEDC Membership:
The strength of the Israeli economy was formally recognized when Israel became a
member of OEDC (Organization for Economic Co-operation and Development) in
May 2010.
FTAs with the EU and NAFTA:

Israel is the only country who has free trade agreements with both the European
Union and NAFTA (United States, Canada and Mexico).
Gross Domestic Product (GDP):

Israels Gross Domestic Product was worth 242.93 billion US dollars in 2011, as per
the report published by the World Bank. The GDP value of Israel is equivalent around
0.39% of the world economy.
GDP Growth Rate:

The Gross Domestic Product (GDP) in Israel expanded 0.70% in the third quarter of
2012 with respect to the previous quarter. The average GDP growth rate is 1% from
1980 to 2012.
GDP Annual Growth Rate:

Israels Gross Domestic Product (GDP) expanded 3.12% in the third quarter of 2012
over the same quarter of the previous year. Taking the average from 1996 to 2012,
Israel GDP Annual Growth Rate is 3.88%.
GDP per capita:

The GDP per capita of Israel was 22859.68 US dollars in 2011, as per a report
published by the World Bank. The GDP per Capita in Israel is 185% of the world's
average GDP pae capita. Taking the average from 1960 until 2011, Israel GDP per
capita is 14315.57 USD.
GDP Deflator:
According to a report of Israeli Central Bureau of Statistics, GDP Deflator of Israel
increased to 116.21 Index Points in May of 2012 over the 113.53 Index Points in
February of 2012.
Gross National Product:

Israel Gross National Product (GNP) increased to 224168.90 ILS Million in May of
2012 over the 220941.10 ILS Million in February of 2012, according to a report of
Central Bureau of Statistics, Israel.
Consumer Price Index (CPI):

The Consumer Price Index (CPI) of Israel increased to 106.20 Index Points in August
of 2012 from 105.10 Index Points in July of 2012. Taking an average from 1951 to
2012, Israel Consumer Price Index (CPI) is 29.97 Index Points.
Inflation Rate
The inflation rate of Israel, recorded in october 2012, was 1.80%.
EXTERNAL TRADE
ISRAEL IMPORTS:
Israel has poor natural recourses, so that it imports the petroleum, coal, food, uncut
diamonds, other production inputs, and military equipment. The main imports come
from European Union, United States and China. Israels import was 6987.6 USD
Million in October 2012.
Israel Exports:
Israls major exports are machinery and equipment, software, agricultural products,
cut diamonds, chemicals, textiles and apparel. Main export partners are European
Union, United States, Hong Kong, India and Turkey.
Israels export was 4434.40 USD Million in October 2012. Israel's exports, around
half, manufactured goods involve advanced technology systems but Israel's traditional
mid-tech and low-tech industries are remaining strong.
The Total Exports in the first eight months of 2010 was $38.9 billion compared with
$29.6 billion in the corresponding period of 2009. The imports of $38.4 billion in the
first eight months of 2010 compared with imports of $29.9 billion in the
corresponding period of 2009, we can say, Israel has a small positive balance of trade.
Israel withstands the recession:

The first reason was a strong regulatory system and a moderate banking tradition kept
its banks away from recession. The second reason was the elasticity of labour market
in coping with the new reality. The third reason was Israelis cut the durable goods
expenditures, butlargely kept the nondurable goods spending even with pre-recession
levels, cutting into personal savings to "smooth out" the drop in income.
A long term Potential:

Israeli economy was built from scratch, survived numerous crises and severe
economic deprivation, and has finally known as a successful, free market economy
whose citizens enjoy a high standard of living.
SOCIAL FACTOR
Religions
The modern country of Israel contains two different nationalities, the Jewish and the
Palestinian. These two nationalities are complicated from its religious and cultural identity.
Among these two nationalities, the Palestinians are Arabs and their customs are founded in
Muslim culture and the Jews in Israel define their culture in the huge part around their belief
as well.
Israel is the Sacred Land of the worlds great religions such as Judaism, Christianity and
Islam. Though Judaism is the popular religion here, the liberty to practice any of religion
within country is guaranteed. The religions legally known under the Israeli law are mainly
Jewish, Christian, Muslim etc. Israel protects the independence of Jews and non-Jews similar
to involve in their chosen form of worship exercise.
Language
National or official languages are Hebrew and Arabic. Hebrew is written from right to left.
About 50% of the Jewish people are Sephardi and half Ashkenazi. 21% of Israeli citizens is
Arabs whose day-to-day language is either Arabic or Hebrew. Along with the local
languages, 35 languages are spoken in Israel.
Gender status
In the Orthodox custom, women and men live very distinct lives. Here, women are measured
inferior, and they are excluded from many of traditional activities. However in Israel, most of
society is most advanced, and women are usually given equal status to men, both legally as
well as socially. Women are working in many fields such as traditional fields like nursing,
child care, teaching and nontraditional one includes politics, military etc. Women are mostly
restricted to administration and education and generally do not achieve high positions in
many field.
Population
In Israel, demography is administered by Israel Central Bureau of Statistics. Nation has a
population of about 7,933,200 in 2012 and 75.4 %of them are Jewish people and 20.6 %are
Arab people while the remaining 4 % are others.
10
Employment
In Israel, the year 2011 was a good for the economy. Unemployment reduced from 7.4% in
2009 to 6.7% in 2011. The average salary of employees increased marginally by 0.9% and
average salary of the senior executives was increased by 11%. In Israel, share of employees
in the country income also improved slightly, from 63% in 2010 to 64% in 2011. Here, the
share of employees is much lesser than it was at the start of the decade: 69%.
Income distribution
In Israel, the average income for the richest 20% of people is 7.5 times more than the poorest
20% of the society, According to the report published in 2011.The gap between the rich
people and poor people in Israel has been gradually increasing, with the average individual
incomes of the same groups 6.3 times before 10 years.
In 2011, a study recognized that the average family income of Jewish majority was NIS
14,169(USD $3,796) per month, whereas the average income of Arab minority was NIS
8,169 (USD $2,186) per month.
Standard of living
In Israel, the standard of living is high and is continuously improving. In 2011, Israel ranked
15th out of 194 countries in the Human Development Index .This country also has highest
life expectancies at birth in the world. However, country still suffers from poverty with
20.6% of population living below the poverty line in 2011.
Health care
Israels national health care system, established in 1995, provides universal coverage by
requiring citizens to join one of four competing insurance plans that, by law, have to provide
certain base level services. The plans cannot reject customers because of pre-existing
conditions.
Israel has 46 acute-care hospitals, with approximately 15,000 acute-care beds. The Ministry
of Health operates about half of those beds, another half beds are operated by the largest
health plan (Clalit Health Services), and the remaining beds are operated by a mix of forprofit and nonprofit organizations. The hospitals are financed primarily via sale of services to
the health plans, and they do so through a complicated mix of reimbursement arrangements.
11
Social welfare
Social welfare programs contain pensions for the elderly, workers' compensation, and
allowances for big families. The government offers support for recent migrants, though these
programs have been criticized for assisting well-off migrants at the cost of poorer native-born
Israels people.
Israel has a broad social security system that pays a sequence of benefits and scholarships to
those in financial need. The insurance system includes every resident of Israel and the social
program has a series of means verified assistances that are applicable to people of aged 20 or
older.
TECHNOLOGICAL FACTORS:
The Science and technologyis among the Israels most developed sectors and going on. The
42% Percentage of the people engaged in the scientific and the technological inquiry, and the
amount spent on R&D in relation to its GDP, and it is highest in the entire world. Countrys
% of total number of scientific articles available worldwide is almost 10 times higher than
Israels % of the world's population.
NATURAL SCIENCES
ENVIRONMENTAL SCIENCE
This countrys lack of conventional energy sources has spur far-reaching R&D of the
substitute energy source. The country is becoming the world's principal per capita user of the
solar water heaters in home. In the 2009 ranked among the top 10 clean tech countries in the
world, behind Denmark, Germany, Sweden, Span & the UK.
SPACE SCIENCE
Since 1970s and 1980s country had begun to develop the infrastructure requires for R&D in
space exploration and the sciences. In the November 1982, they established the Israel Space
Agency. The budget of the ISA is approx 6 million U.S $. Ilan Ramon was the countrys first
astronaut. The Israel has also developed into significant player in the commercial space
arena.
12
PHYSICS
The team of 50 Israel scientists works full-time at the CERN, which operate the Large
Hadron Collider project in Switzerland. The Israel delegation headed by the President
Shimon Peres visited the Large Hadrons Collider project in 2011.
ENGINEERING
AEROSPACE ENGINEERING
Country is among the few countries all around the world which are capable of launching
satellites into the orbit. Israel Aerospace Industries manufactured Arava plane which was first
aircraft to be produced in the country, locally designed and the manufactured satellite have
been produced and launched by IAAI also. The Israel does also develop, manufactures, &
exports a large number of interrelated aerospace goods, like aeronautical supercomputer,
display system, drones and flight simulator, instrumentation system.
AGRICULTURAL ENGINEERING
The growth of agricultural production in Israel is due to the close cooperation of farmers,
scientists, and agriculture-related industries & also resulted in development of new
agricultural technology, water conserving irrigation, anaerobic digestion, greenhouse
technology, desert agricultures also. Israeli companies are supplying irrigation, water
conservation and greenhouse technology to the additional countries. The up to date
technology of drip irrigation was introduced by the Israel also. Countrys farmers rely highly
on the technologies. Farmers successfully growing between 3.5 to 4.5 million roses per
hectare in season and also an regular of 400 bags of tomatoes per hectare.
COMPUTER ENGINEERING
The high concentration of high-tech industry to coastal plain of the country has led to the
nickname Silicon Wali. Both Israeli and global companies are based there. Intel&Microsoft
have built first foreign R&D centers there. High-tech international corporations, like IBM,
&Motorola opened in country. Intel developed dual-coreCore Duo processor in Haifa of
Israel.
13
HYDRAULIC ENGINEERING
Because the rain falls only in winter in Israel, and largely in north part of the Israel, the
irrigation &water engineering is important for country's survival and growth. Three Large
scale projects to direct water from the rivers in north, to make optimal use of groundwater.
The major project was the nationwide water distribution system, completed in 1964, flowing
from the Israels principal freshwater sea, the Sea of Galilee, to the north Negev desert.
MILITARY ENGINEERING
The countrys Defense Forces are relies heavily on local military technologies and high-tech
weapons system, designed and manufactured at home. Israeli-developed military equipment
includes small arm, anti-tank rocket, submarine, tank, armored vehicle, unmanned surface
vehicle, aircraft, unmanned aerial vehicle, air-defense system, weapon stations and radar.
They have developed a network of reconnaissance satellites also.
HEALTH SCIENCES
Israel has a superior infrastructure for medical and paramedical research and capability for
bioengineering. The most of scientific publication accounts for biotechnology, biomedical
and clinical research, and also the industrial sector has used this widespread knowledge to
develop pharmaceutical, medical equipment and treatment therapy.
MEDICINE AND GENETICS
Their scientists have urbanized method for produce a human growth hormone plus interferon,
the group of proteins effectiveness against the viral infection. Genetic engineering is resulted
in wide range of analytical kits based on monoclonal antibody, with other microbiological
products. The Advanced stem cell research is also taking place in Israel. Most articles
published related to stem cells research in scientific journal were by Israeli scientists on per
capita basis.
BIOMEDICAL ENGINEERING
The Sophisticated medical equipments for both diagnostic & treatment purposes are been
developed and marketed worldwide by Israeli, such as computer tomography scanners,
magnetic resonance imaging systems, ultrasound scanner, nuclear medical camera, & surgical
laser. Scientists from several European countries & Israel developed a robotic prosthetic
hand, called Smart Hand, which function like a real one.
14
PHARMACEUTICALS
The Teva Pharmaceutical Industry, headquartered in Petah Tikva, is one of the 20th largest
pharmaceutical companies worldwide. It is also specializes in generic drugs & active
pharmaceutical ingredient & has developed proprietary pharmaceuticals like Copaxone for
the treatment of multiple sclerosis.
1.5 ENVIRONMENT FACTOR
INTRODUCTION TO ENVIRONMENT OF ISRAEL
The current environmental problem is seen worldwide; among them most serious
issues relating to environment are destroyed humid rain forest, the reduction of the
ozone layer, acid rainfall, soil erosion and reduction, and global warm.
Many countrywide projects were made for a safe removal of bottles campaign, the
institution of eco-labeling on ecologically aware products, and various onslaught and
recycling campaigns took place. Many laws have in recent times been passed to
decrease pollution and other environmental dilemma.
ENVIRONMENTAL PROBLEMS IN ISRAEL

Air Pollution
In Haifa where for years the population suffer from the fumes emission of the local oil
plant and the Israel Electric Company plant also it was suffer sulphur dioxide levels
more than four time advanced than the regular permissible.
Nature Protection and Wildlife Management
None of the neighboring Arab states except Jordan, have been helpful to nature safety
service and many home-grown animals such as gazelles, ibex, hyenas and others are
now very atypical in those countries.
In addition, Israel is the provisional dwelling and therefore de facto protector of

additional than three-quarters of Europe's wandering birds, which impede over here
on top of their way south in the autumn as well as on their arrival to Europe in the
spring.
15
Sound Abatement
The IUED has succeed in obtain court instructions to decline noise from various
sources in suburban area and it is to be hope that more such dealings will be
accommodating.
Pesticides
Although both the ministry of strength and agriculture are fantasy to monitor food
quality, both stubbornly reject to discharge their answer to the public, maintain that
"this would confound people.
Sewage
On the whole of systems used in Israel for acquit of sewage effluents and the
sedimentation and exposure to air ponds and the sewage treatment plants are scarce to
the demands placed on them today.
In many cases, communities have been urbanized without the appropriate

communications, and it was only newly view that one of the oldest settlement in the
Galilee was rehabilitated from cesspits to a central sewage throwing away system.
Toxic Waste
Toxic waste permission in Israel has significantly enhanced over the earlier period,
but is still a long way from acceptable.
At the same time toxic waste from farming and from family and small businesses has
hardly been address. humanitarian general public sometimes assemble used battery
that poison the groundwater with a mixture of metals counting nickel, and lithium,
but once they have composed them, no one seem to be clever to classify any transfer
to the toxic squander abandon.
Proposal Taken By Israel Government for Healthy Environment Reforestation
16
David Ben-Gurion declared, I do not know if there is a more productive endeavor

whose results are useful as the planting of trees. Israel is a worldwide leader of
reforestation and life conservation.
Israel is one of the few countries that started the 21st century with added trees than it
had at the start of the 20th century. Also the empathetic organization has planted
added than 240 million trees in Israel including 12,500 acres of forest every year.
Substitute Energy
In 2007, Israel was chosen as USs partner in option energy investigates, temporary a
law to give millions of dollars to finance joint investigate projects to help together
country.
Israeli company Innowattech has urbanized a new substitute energy system that
harvests mechanical energy imparted to roadways, railways and runways as of passing
vehicles, trains and walker traffic and converts it into green electricity.
Water Conservation
From 1959, Israel has been a leader in water conservation with a popular slogan
Dont Waste a Drop.
Israel treats 92 % of its wastewater and reuses 75 % in agriculture which is the highest
pace in the world.
Agricultural Development
Israeli company uses Bio-Bee Biological Systems like bumblebees and crop fly to
support cross-pollination and control pests in an eco friendly way.
Also an Israeli scientist urbanized a mixture of tilapia seek that thrive in burning, salty
waters, which resulted ten times more fish to Israeli fish farmers.
ENVIRONMENTAL RULES AND REGULATIONS
Air Quality
Nuisance Abatement Regulations , 2001

Regulations on pollution from vehicles on the road, promulgated by the Minister of
the Environment, prohibit driving a vehicle unless it meets the technological
standards.
17
Clean Air Regulations, 2010

This law sets requirements for emission permits from major industrial polluters,
which includes, major energy, metal, mineral, chemical, and waste management
industries, as prcised in the control of the law.
Environmental planning
Representation of Environmental Public Bodies Law, 2002

The purpose of this law is "to add legislative body of public concerned with
environmental protection to committees recognized by law for the purpose of
emphasizes environmental considerations in these committee in order to save from
harm and defend the environment and to prevent harm to the environment."
Environmental Protection Law , 2008

The aspire of this Law is, "to keep and preserve a proper quality of the environment
and to recover it, to prevent damage to the environment, the benefit copied or the
profits reaped from implement the offenses dealing with the aforesaid scratch."
Hazardous Substances
Plant Protection Law, 1956

This Law grants the Minister of Agriculture authority, for following discussion with
an optional interdisciplinary commission, to control the import, sale, distribution and
covering of pesticide, fertilizers and other material.
Work Safety Regulations, 1964

These regulations search for to make sure the safety of those working with pesticide,
defined as chemicals aimed at the finishing of pests, with the exception of veterinary
medicine.
Dangerous Substances Law, 1993

This law authorizes the Minister of the Environment to certify, control and oversee all
aspects of the make, utilize, managing, storage space, marketing, import and export
and transport of hazardous substances.
Hazardous Substances Regulations , 1996
18
These set of laws classify hazardous substances into categories A and B and specify
exemptions for certain materials in won over quantities.
Safety at Work Regulations , 1998

This system, inside the structure of the dangerous Substances Law and the Safety at
Work order, require producers, importers, distributors or sellers of a hazardous
substance to supply recipients with Material Safety Data Sheets (MSDS), and call for
the maintenance of an MSDS in the factory or business in order to inform users about
hazards in their place of work.
Prevention of Sea Pollution from Land-Based Sources Regulations, 1990

These regulations relate to permits for the discharge of waste or sewage into the sea
from a land-based source which may or may not be fixed by the Permits Issue
Committee. The committee decides whether a permit is justified, and if so under what
conditions and for how long a time.
Wildlife Protection Law, 1955

This law authorizes the Minister of Environmental Protection to manage the hunting
of natural animals, to issue hunting permits and to assign inspectors to implement the
law.
1.6 LEGAL FACTORS

Israel Court structure is of three Tiers. The magistrate court is the lowest court which is
situated in almost every state of the country . The courts above magistrate court are called
district courts, serving both as appellate courts and courts of first instance; they are located in
five of Israel's six districts. The third tier is the Supreme Court, located in Jerusalem; it serves
a dual role as the highest court of appeals and the High Court of Justice. In the latter role, the
Supreme Court rules as a court of first instance, allowing individuals, both citizens and noncitizens to petition against the decisions of state authorities. Although Israel supports the
goals of the International Criminal Court, it has not ratified the Rome Statute, citing concerns
about the ability of the court to remain free from political impartiality. This is quite similar to
that in India. Here also there is a three level of courts, magistrate courts, high courts and
Supreme Court. Here also Supreme Court is the highest court to appeal. It is the last hope for
justice seeking people.
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Israel's legal structure is formed of three legal traditions: 1. English common law, 2. civil law,
and 3. Jewish law. It is based on the belief of stare devises (precedent) and is an adversarial
structure, where the parties in the suit bring evidence before the court. Court cases are
resolved by professional judges rather than juries. Marriage and divorce are below the
judgment of the religious courts: Jewish, Muslim, Druze, and Christian. A board of Knesset
members, Supreme Court justices, and Israeli Bar members carries out the election of judges.
Administration of Israel's courts (both the "General" courts and the Labour Courts) is carried
by the Administration of Courts, situated in Jerusalem. The good thing about Israel Legal
Structure is that both their Courts, General and Labour courts are paperless courts: the storage
of court files, as well as court decisions, is conducted electronically.
Israel's Basic Law: Human Dignity and Liberty seeks to defend human rights and liberty in
Israel. Israel is the only country in the region ranked "Free" by Freedom House based on the
level of civil liberty and political rights; the "Palestinian Authority-Administered Territories"
was ranked "Not Free." In 2012, Israel was ranked 92nd the highest ranking in the region
according to Reporters without Borders' Press Freedom Index.
The first cabinet
The first cabinet of Israel consists of the provisional government of Israel (HaMemshela
HaZmanit ) which governed Israel shortly before independence until the formation of the
first government in March 1949 following the first Knesset elections in January that year. On
12 April 1948 just a month later "Minhelet HaAm" (People's Management), was created, for
preparation of independence. All its thirteen members were taken from Moetzet HaAm, the
temporary legislative body set up at the same time.
Chief Characteristics of the Structure
In Israels Legal System the good thing is the Absence of a Single-Document Written
Constitution in the Israeli Declaration of Independence. On May 14, 1948 after the
termination of the British Mandate, Palestine was forced the existence of a future formal
constitution for Israel. Inspite of this the declaration has never been seen as a constitutional
document of Israel. It was taken by the Supreme Court as a document that incorporates the
wishes and the intent of the founding fathers of the state that was reborn. As such, it did not
grant the judiciary, the power of striking down legislation which clearly negates its content.
However, if legislation may be interpreted in several ways, the Court holds that laws should
20
be interpreted in a way consistent with the principles expressed in the Declaration. Utilizing
the latter method, the Israeli Supreme Court, as a high court of justice, has managed to
develop fundamental constitutional principles while these are protected by constitutions in
other Western democracies .
The Court Structure And Structure In Israel
The Israeli court structure is made of a general court and a number of specialized courts. Here
the judiciary independence is guaranteed under Basic Law known as Judicature.
The General Court Structure
The general court structure of Israel is comprised of three courts namely magistrates' courts,
district courts, and the Supreme Court. The Supreme Court of Israel is the utmost court of
appeal. Like India the Supreme Court in Israel is the highest court of justice, and has the
authority to adjudicate administrative matters that are not subject to the judgement of district
courts. Special courts, like the labour courts, military justice courts and religious courts have
special judgement in relevant restricted regions. Judgement of these appellate tribunals courts
are subject to a limited review by the Supreme Court which is regarded as the highest court of
justice.
Geographically the judgement of Israel is divided among five judicial districts which are
Jerusalem, Tel-Aviv, Haifa, Beer-Sheva, and Nazareth. Magistrates and district courts have
control throughout their respective regions or districts where these courts are Located. The
Supreme Courts judgements prevail over the whole nation. Actions that do not fall within
the judgement of any of the geographical districts are heard in the District Court of
Jerusalem.
The Supreme Court is in Jerusalem having twelve judges. It normally acts as a bench of three
judges, except when the President or the Deputy-President directs a bigger bench, or in
further hearings on matters it has already adjudicated. Petitions for temporary orders and
other interlocutory decisions and certain other proceedings are heard by one judge only.
District courts have residual judgement over all criminal and civil matters which do not fall
within the judgement of the magistrates courts, and general residual judge any matter that is
not under the exclusive judgement of any other court or tribunal. A district court bench is
21
composed of one judge in regular matter and three in case involving serious offenses or when
specifically directed by the president or vice-president of the district court.
Magistrate courts have original judgement in criminal matters related to offence which carries
a maximum punishment of 7 years. The judgement of magistrates court in civil matters
usually depends upon the monetary value of the claim. Certain magistrates courts may be
authorized by a decree to serve as special tribunals, such as a family court or juvenile court.
A magistrates court normally sits as a bench of one judge, except that the judge hearing the
case or the president of the magistrates court may direct that the case be heard by three
judges. A magistrates court may be authorized by the Minister of Justice to sit as a small
claims court. A claim before the latter is always heard by a single judge
SWOT
STRENGTHS
Strong Economy
Israels economy is on rise and carry on to thrive due to its sturdy multinational corporate and
defence industry and its exports. Due to its strong economy it has recovered in a better way
and up to a great extend from the 2007-08 global recession, compared to other advanced
economies in 2010. The International Monetary Fund found that Israels fiscal strategies
helped it avoid the global crisis, and its economy remained strong when other major
economies around the world were struggling with recession, debt and unemployment.
The IMFs annual inspection of Israels national accounts concluded that Israel's economy
remains strong, and gave the government and central Bank of Israel some gold stars for key
economic policies. Not only had Israel weathered the global economic crisis well, but Israels
economy continues to grow at acceptable rates while inflation is down and unemployment is
at its lowest level ever.
Inflation rate means a normal rise in prices measured against a standard level of purchasing
power. The commonly used measures of Inflation are the CPI (.i.e. consumer prices), the
GDP deflator, and the whole of the domestic economy. When we analyse some facts and
22
figures about Israles Inflation rate, it is clear that it has struggled continuously in bring
inflation down and has also succeeded greatly.
The inflation rate of Israel, recorded in october 2012, was 1.80%. Taking an average from
1952 to 2012, Israel Inflation Rate is 32.0% reaching an all time high of 486.2% in
November of 1984 and the lowest record was -2.7% in March of 2004.
WEAKNESSES
Distance from Markets
Although demand for various technologies is very high per capita but due to geographically
broaden location of the country, many a times the markets fail to reach the customers. But
due to the technological advancement, which means Internet has created the free flow of
information and decreased the gap and distance for the communication between countries, the
geographical distance between Israel and its consumers is a barrier for the country.
Slow e-commerce adoption
Although B2B and B2C activity is increasing in Israel, but practice of the same is still behind
the other sectors of the high-tech industry. E-commerce practices have been rather slow due
to Israeli hesitancy to provide credit card information over the web and because of the culture
preference to touch items before purchase.
OPPORTUNITIES
Tourism Industry
The tourism industry is well managed by the tourism ministry of Israel. There are various
places to explore, they have national parks, archaeological tells, natural reserve, museums,
restaurants, hot springs etc. The people from U.S and Europe are the major visitors of Israel.
The ministry of tourism have various subsidiary departments like tourism marketing
department, ministry economic unit and tourism service department. These departments
organise various training programs & seminars, so as to have more skilled and professional
man force in this industry.
23
Israel should also focus on safety issues of the travellers to attract more number of tourists
from other countries apart from US and European countries.
Construction Industry
The Israeli construction industry is characterized by a high level of mechanization, quality

building materials, modern design, coupled with a chronic shortage of skilled workers. The
industry of construction in Israel includes more than 10000 registered contractors but there is
always a shortage of workers. This need is generally filled by foreign workers, who are
employed under contract for limited or specified periods.
THREATS
Terrorism
Israel is the country which is located in the area which always suffers the tension of
terrorism. Terrorism is an above average threat not only throughout Israel but also in its
neighbouring regions. In such a situation it is extremely necessary for any country to develop
a strong security system. But the terrorism in Israel is so intensive that Israel fails to maintain
the security.
Most of the times, the circulars of political and military tensions are issued. Such circulars
also address to the safety of residents and the travellers and visitors. The travellers are asked
to avoid any large demonstrations or protests which could potentially turn violent.
Apart from terrorism, Israel also suffers petty issues of security which include theft problems
and kidnapping. Although relatively low, the reports on incidents of petty theft keep on
coming. All the travellers and the visitors are requested to keep their passport and the other
valuable things in safer place throughout their visit any avoid any unwanted display of wealth
which would attract the unwanted attention.
According to the British Foreign Commonwealth Office site, Israelis living in the illegal
settlements in the West Bank occasionally organise demonstrations on West Bank roads:
these sometimes turn violent, with the settlers throwing stones at passing Palestinian and
international vehicles. Take particular care if hiking near any of these settlements, including
those in the hills around Nablus and in the South Hebron hills.
24
Because of the fear of terrorism, there is also a threat of less tourists turning up to Israel.
Therefore there is a fear of loss of income from the visitors from foreign countries.
FINANCIAL MARKETS
Any financial market can be broadly classified in the following major markets as shown in
the chart below:
Capital market
Israel Capital Market consists of the stocks and bonds traded on the TEL AVIV STOCK
EXCHANGE (TASE). Israel Securities Authority, a government regulatory body regulates
the capital market of Israel. The mandate of the governing body is to protect the interests of
the investing public. IPOs are issued and securities are traded on the electronically traded
TASE.
Stocks
On this stock exchange, 736 companies are listed. Some of these companies are local
corporations while some are international powerhouses such as Teva Pharmaceutical
Industries.
25
Around 1000 stocks with a daily volume of $800 million are traded on the Israeli Stock
Exchange.
Bonds
Tel Aviv Stock Exchange has also a liquid and corporate bond market. Israel Government
Bonds and corporate debentures include short, mid and long-term fix-rate, variable-rate, and
cost-of-living indexed bonds. Daily bond trading volume is $760 million.
Israeli Currency
Trade on Israeli Stock Exchange takes place in Israeli Shekels (NIS), providing the foreign
investor currency diversification. Other investment vehicles are foreign currency options,
futures and forwards.
Derivative market
Israel belongs to the emerging market economies. Derivative markets in the emerging
economies are small as compared to the advanced economies. OTC derivatives are more
important in case of the emerging economies.
Derivatives are traded in almost equal proportions over the counter and on the exchange in
the emerging economies. Derivatives are used to hedge or speculate on exchange rate and to a
lesser extent, equity market risk.
The OTC market in EMEs is dominated by FX derivatives, which account for nearly 90% of
total turnover. The interest rate derivatives markets in EMEs are much smaller than the FX
markets. The growth of derivatives turnover in emerging markets remains more rapid than in
advanced economies.
Foreign Exchange Market

The Bank of Israel holds the foreign exchange reserves to provide liquidity in foreign
currency when it is needed, such as to finance the repayments of the country's debt, to pay for
exceptional government expenditure on imports at times of emergency, to provide liquidity in
a financial crisis, or to be sold as necessary in the course of conducting monetary policy.
26
The Bank of Israel calculates representative exchange rates once a day on foreign-currency
business days only, and makes them available to the general public as a purely informational
service.
The average rate in NIS is calculated on the basis of a sampling of exchange rates published
by the banks on the Reuters screens, taken at a random moment, which is currently between
13:15 and 15:15 (or between 10:15 and 12:15 on Fridays, holiday eves and some other Jewish
holidays).
The representative exchange rate is currently published soon after 15:15 (or soon after 12:15
on Fridays, holiday eves and some other Jewish holidays). The representative rate is
calculated from the average of the banks sampled, and excludes values which deviate from
the sample average by more than two standard deviations.
The representative rates of the NIS against other currencies are based on the representative
rate of the US dollar and the exchange rates of the relevant currencies against the US dollar
on the international money markets at the moment the representative rate is determined. The
Bank of Israel's Market Operations Department monitors and analyzes current developments
in the foreign exchange market, and carries out the Bank's exchange rate policy. Foreign
exchange trading takes place primarily between banks and their customers both in Israel and
abroad, and between the banks themselves.
Every foreign exchange trading day, the Bank of Israel publishes the representative exchange
rates of the shekel against foreign currencies. The representative rate is based on market
prices around the time the rate is set.
Insurance Market
Insurance market of Israel is an agency market and the style of operation is different than at
the global level. The method of working of the Israel Insurance Industry is such that they are
insured for the risks globally also. Many well known insurance brokers have their offices in
Israel. There are four major insurance companies in Israel (Clal, Migdal, Harel and
Phoenix).
Israel market could withstand the subprime global crisis because of its strong Insurance
industry. There is a huge and strong competition among the insurance agents in Israel, due to
which premium is very less.
27
Another factor which affects the low insurance rates in Israel is the role of the insurance
consultant. In Israel the players in the insurance market are: the insurance company, the
agent/agency and the consultant.
Exim Policies of Israel

Exim policy instruments are effective tools used by a country to accomplish its goals of
economic development. These policies are formulated keeping in view the national priorities
for economic development and the international commitments made by the country.
For exports, The Israel Export and International Cooperation Institute (IEICI) were
established in 1958 as a non-profit organization by the government of Israel and the private
sector. IEICI promotes exports through initiatives and programs in numerous countries, in use
through Israeli marketable and economic attachs, as well as limited business improvement
representatives. It maintains operational relationships with overseas diplomats and
marketable attachs in Israel and trade organizations all over the world. It also provides
information and consulting services, offering broad connections and support in promoting
exports of Israeli companies as well as balancing services for the international business
society. Over years, it has played a major task in increasing relations between international
business houses and Israel exporters. It provides a variety of services to commerce
organizations in that country with mean of supporting them with export.
EXPORTS:The Israel Export and International Cooperation Institute (IEICI) were established in 1958 as
a non-profit organization by the government of Israel and the private sector. IEICI promotes
exports through initiatives and programs in several countries, working through Israeli
marketable and profitable attachs, as well at the same time as local business progress
representatives. It maintains operational relations with overseas diplomats and marketable
attaches in Israel and trade organizations all the way through the world. It also provides in
sequence and consulting services, offering widespread relations and aid in promoting exports
of Israeli companies at the same time as balancing services for the international business
community. Over years, it has played a major task in increasing relations between
28
international business houses and Israel exporters. It provides a variety of services to

commerce organizations in that country with mean of assisting them with export.
Professional Goods Service includes:
Exhibitions & Fairs.
External Relations.
The centre for Export & International Trade Studies.
Economics.
Centre for Small Exporters and Media & Production Division.
The export policy of Israel prohibits:

The export of Dogs and cats, Antiquities and items of great cultural significance (can be
exported after getting the required permission from the Israel Antiquities Authority), Fresh
Meat, Bananas and Pineapples; Fruit and Vegetables from the African continent, Religious
material, etc. While the same policy restricts the exports of Illegal drugs, Weapons,
Explosives and ammunition, Knives and deadly weapons, Plant and plant products unless
permission has been obtained, Soil, Milk and Dairy products, Fresh Meat and meat products,
Games of chance and gambling machines, Cordless Phones with a array of up to 900 MHz,
Counterfeit money and goods, Pornographic material, etc.
Israels exports can be classified in the attributes of various countries. Its Arms Export to
Georgia and Russia used to be a chief Israel export collaborator as far as arms and
ammunitions are concerned. Nevertheless, these Israel export, import and trade transactions
had to be restricted so that its relationships with Russia were not exaggerated in process.
Russia currently imports unmanned aircrafts from Israel. While its exports to Arab countries,
the latest rumor suggest its exports to countries in Arabian region have been going downward
at a surprising rate. This is especially true of first quarter of 2009 fiscal. This news has been
confirmed by Manufacturers Association of Israel.
IMPORTS:Israel has the policy which allows the imports of products which are not available in the
nation and the branded products from companies of various countries on the basis of deals
formed with them. The imports include: Computers, Integrated Circuits, Aircraft Parts and
Other Defense Equipment, Wheat, Automobiles, etc.
29
It has various sets of custom duties which restricts or permits the imports. These laws check
the rights of the importer and where the goods are being imported for personal use or the
commercial purpose. Further it allows or restricts imports on the basis of the class of the
person which are defined in the laws of Israel and the residential status or citizenship of the
importer.
PROHOBITED IMPORTS:The Ministry of Agriculture in Israel states that Importing ISRAELs INTERNATIONAL
TRADE TIES
plants and plant products keen on Israel, moreover commercially or in passengers private
baggage, is question to authorization by the Plant Protection and Inspection Services (PPIS)
of the Ministry of Agriculture. Additionally, Permits are necessary for importing fresh
produce, plants, plant products, seed, dissemination material, and biotic material.
Any cats, dogs and other animals being imported will require a on paper statement declaring
that they have owned the pet for more than 90 days prior to commencement their flight, a
general fitness certificate from the country of origin and a rabies vaccination certificate. Pets
impending from the UK will need a rabies vaccination after not more than five days within
the
country.
The prohibited imports include something more than the prohibited exports, while the
restricted imports are same as the restricted exports.
NATURAL RESOURCES
Imagine one fine day one wakes up and finds there is no electricity anywhere, no petrol/diesel
to run vehicles, no gas for cooking food and so on. We cannot even imagine living one
nanosecond without all these things. This horrifying hypothetical situation clearly explains
the impact power and energy has on our lives and the thrust each country lays on its Power
and Energy Industry. No economy can think of sustaining itself in absence Oil & Gas. In
other words it can unmistakably be said that power and energy industry is the life line of any
country without which life on earth will come to a standstill.
Israel is counted in those countries which are not much gifted with natural resources whether
it is water or minerals or energy, but country can hold its position in globe with its high-tech
inventions & innovative technologies. Even though having least supply of water, Israel
30
generates hydroelectric power in average of 3 million KWH which makes Israel worlds
technological leader in water technology. Israel is also a major contributor in solar
technology. And therefore Israel is a perfect example of the country which can survive with
limited means by making the most out of its resources with the use of technology and could
manage to establish as high-tech country over the globe.
Natural Resources in Israel
Israels natural resources include minerals, most of them discovered from the Dead Sea;
variety of clays having multiple uses; the famous Dead Sea mud, which is exported
worldwide for skin care; sand which is used in making glass; Israeli timber woods are
popular across the globe; in metals plenty amount of copper ore is also exist in Israeli land;
recently from Mediterranean Sea gas worth of $240 billion is found, these discoveries have
created huge potential of growth for country. Israel also has oil shale reserves are actually the
equivalent of 250 billion barrels.
Israel produces minerals like Bromine, Quick Lime & Hydrate Lime, Raw Steel, Hydraulic
Cement, Magnesium, Potash and Gypsum. Bromine production is highest among overall
mineral production i.e. on average 175,000 metric ton, which is generally used as sedatives
and anti-convulsing medications; while, Potash, used as fertilizer is produced on an average
of 2,000 metric ton. Moreover plenty of phosphate rocks are mined which carry agricultural
and industrial usage.
Apart from minerals Israel is having source of varieties of clays which have numerous uses.
Dead Sea mud is world famous for mineral-rich formula to tighten and smooth the skin. Sand
of Israel coast line isvery popular worldwide for making glass and for other purposes.
Enormous amount of timber woods are found in the desert area of Israel. Besides, the land is
filled with plenty of copper ore.
Israel has very little amount of energy resources like Crude oil, LPG, therefore consumption
is totally dependent on the imports. Moreover, recently the huge amount of natural gas supply
has been found offshore the Israel coastline so Israel possesses approximately 700 billion
cubic meters of gas reserves.
Comparing the resources of the Israel with India, India would definitely beat Israel in figures
as geographically India is larger than Israel but in the preservation of limited resources with
the use of advanced technologies Israel is an unbeatable country. India can definitely use the
31
technologies of Israel by establishing trade relations. Moreover, the gas discoveries in Israel
give a hope to India to establish business relation in field of Oil and Gas Sector with Israel.
Though Israel is a small country with somewhat limited natural resources, it has managed to
gain a position as an innovative, high-tech & now a growth potential country (due to gas
discovery).
32
th
4 Semester
CHAPTER 1
Defense Industry of Israel
1.1 INTRODUCTION
Israel defence industry is in own a successful high-tech sector. The entrepreneurial spirit, the
problem-solving approach, and the system-oriented approach, which are characteristic of
most of the successful high-tech firms in Israel (Kaplan 1998), originated in Israels military
and the defence industry. The defence sector of Israel is still a very important source of new
technological know-how and experienced human resources for the civilian high-tech
industry.
The effect of the defence industry on an economy:

(1) The defence needs of the country
(2) The overall economic situation and the size of the defence industry relative to the
civilian industry
(3) The stage of technological development of the country.
Key Subsectors:
Avionics/Aviation Security
Maritime Security
Land Force
Public Security
Critical Infrastructure Protection
Current market landscape
In 2012, the Israeli defence market valued US$13.10 billion, which represented the third
largest military expenditure in the Middle East. During the review period, Israeli defence
expenditure declined at a CAGR of -0.94% but is expected to record growth at a CAGR of
2.97% during the forecast period. The growth can be partially attributed to the US$15.5
billion of military aid from the US scheduled between 2013 and 2017; moreover, the
continued security threats from Iran, Syria, and other neighbouring Arab countries is forecast
to result in Israel spending US$71.3 billion on defence during the forecast period.
1.2 MAJOR PLAYERS IN THE DEFENCE INDUSTRY OF ISRAEL
A) Israel Aerospace Industry Ltd
Founded: 1953
2
Type: Government-owned
Key People: Founder: Shimon Peres
Headquarter: Lod, Israel
Products: Civil and military aerospace, Business jets, Satellites, Defence electronics, naval
vessels
Subsidiaries: Elta System Ltd
B) Elbit Systems
Founded: 1967
Type: Public
Key People: Michael Federmann (Chairman)
Headquarter: Haifa, Israel
Products:Defence Electronics, Radio communications systems, unmanned aerial vehicles,
Remote weapon systems, Radar, Naval systems
Subsidiaries:Elbit System of America, Cyclone Aviation Products
C) Sol tam Systems
Founded: 1950
Type: Private
Key People: Col David Marchiano (CEO)
Headquarter:Yokneam, Israel
Products: Fire support
D) Israel Military Industries
Founded: 1953
Type: Government owned
Key People:
Headquarter: Ramat HaSharon, Israel
Products: Firearms, weapons, ammunitions.
Overall products and services offered by defence industry of Israel
Civilian Aircraft
Civilian Air Systems
Military Aircraft
Ground defines systems
Ground transportation
3
Naval Systems
Missile Systems
Space Hardware
C4I Systems
Security training
1.3 PRESENT TRADE WITH QUANTITY AND AMOUNT OF DEFENCE FIRMS IN

ISRAEL
A) Israel Aerospace Industry
Traded As: TASE: ARSP: B1
Revenue: 3.44 B USD
Operating Income: 518 M USD
Profit: 133 M USD
Employees: 16,000 Approx.
B) Aeronautics Defence System Ltd.
Revenue: 78 M USD
Profit: 17 M USD
C) Elbit Systems
Revenue: 3.1 B USD
Profit: 256 M USD
D) Soltan Systems
Revenue: 234 M USD
Profit: 198 M USD
1.4 DEFENSE TECHNOLOGY
The technological development of Israels industry during the 1960s and the 1970s was led
mainly by the defense firms. These firms were required to supply the IDF with the modern
and sophisticated weapons and systems it was no long able to purchase abroad because of the
French and American embargo. For Israel, which does not have any natural resources but is
endowed with a relatively highly-educated population, this push in the direction of selfsufficiency based on highly developed technologies proved to be the right one (Tishler and
Rotem 1995). However, as Israel is probably the exception rather than the rule, and as the
countrys civilian industry becomes more developed (as has been the case since the mideighties), the defense firms may lose their role as technology leaders, except in a number of
very specific defense-related applications.
1.5 REQUIREMENT OF RESOURCES FOR THE INDUSTRIAL OPERATION OF
ISRAEL
Israel needs different resources and procurement material for enhancing their defense
industry for the future prospects like.
Skilled labours
Management information system
Experts and scientists
Raw material for different weapons
Huge amount of capital
Natural resources for testing of arms
International supplier for different parts of weapons etc.
1.6 LEGAL ASPECTS AND BARRIERS IN ISRAEL DEFENCE INDUSTRY

According to Gal Luft, Palestinian militants utilize a tactic of blending among civilian
populations which exacerbates civilian casualties in Israeli attacks. He also says that the
absence of independent "Western media" in the Palestinian territories prevents accurate and
reliable reporting on conflicts. Biased media coverage of Operation Defensive Shield, for
example, encouraged militants to use civilians and refugees as "human shields" because they
were not held accountable for their actions. The Israeli military claims it does not target
civilians and that critics do not take into account the "realities" of war faced by the IDF.
Barriers:
5
The revenues depend on a continued level of government business.

The current worldwide economic and financial situation as well as reductions in U.S.
and European defence expenditures may have a material adverse effect on our results.
The contracts may be terminated for convenience of the customer.
Industry depends on governmental approval of exports.
As a government contractor, it is subject to a number of procurement rules and
regulations.
It depends on international operations.
1.7 OVERALL PRODUCTS/SERVICES OFFERED BY THE DEFENCE INDUSTRY
OF INDIA
Advanced communication equipment
Jaguar avionics
MiG-27M avionics
Accessories for aircraft, helicopters and Aero engines

Instruments, sensors, gyros
Electrical power generation and control
Land navigation system
Microprocessor controller
Radars
3D mobile radars.
Low flying detection radars.
Tactical control radars.
Secondary surveillance radars.
Low-level air defense systems.
Medium-range battle field surveillance radars.
Battle-range surveillance radars.
Naval systems
These systems help in communicating between ships, ship and aircraft and ship and shore
stations. BEL has a dedicated strategic business unit to cater to the needs of naval defense
forces. It is involved in the design and manufacturing of a wide variety of control, command
and communications systems, as well as sonar, decoys and son buoys.
Missiles
Prithvi
missile:
medium-to-long
range
missile
systems.
Konkurs-M: semiautomatic, aero missile.
Invar: antitank weapon with a range of five
kilometers.
1.8 BARRIERS TO ENTER IN INDIAN DEFENCE INDUSTRY
Offset policy with restricted FDI of 26% is biased towards the domestic public and
private sectors
Insufficient information and transparency on future plans
Bureaucracy, corruption and long project delays
Developing advanced low-cost solutions is essential to gain market share
1.9 PRESENT TRADE WITH QUANTITY AND AMOUNT OF DEFENCE FIRMS IN
INDIA
A) Hindustan Aeronautics Ltd
Revenue: 13,061 crore
Operating Income: 8,123 crore
Profit: 2,789 crore
B) Bharat Dynamics Ltd.
Revenue: 604.24 Crore
Operating Income: 392.57 crore
Profit: 211.67 crore
C) Bharat Earth Movers Ltd.
Revenue: 5,000 crore
7
Profit: 1,014 crore

D) Brahmos Aerospace Private Ltd.

Revenue: 227.55 crore
Profit: 461 crore
1.10 TECHNOLOGICAL ADVANCEMENT IN INDIA

Critical Technology:
1Gas Turbine Engine: Single Crystal Special CoatingFADEC
2 Missile: Uncooled FPA Seekers
3 Aeronautics: Smart Aero structuresStealth Technology
4 Material: Nano Material, Carbon Fibers
5 Naval Systems: Super Caveating Technology
6 Sensors: AESA, Radar, RLG, INGPS
7 Communication: Software Denned Radio
8 Avionics: Gen III, II Tubes
1.11 COMPARISON OF DEFENCE INDUSTRY OF ISRAEL AND INDIA
ISRAEL
Forces of Changes
INDIA
Different offset policies and Corruption, transparency and

various
security
threats bureaucracy are the most
among the world
important drivers of changes

in
the
Indian
defence
industry.
Major Players
Products
firms
Offered
Israel Aerospace Industry, Hindustan Aeronautics Ltd.,
by
Elbit Systems,
Bharat Dynamics,
Sol tam Systems,
Bharat Earth Movers Ltd.,
Israel Military Industry
Bharat Electronics Ltd.
the Civilian Aircrafts,

Naval
Systems,
8
Radars,
Missile Aircrafts,
Agriculture
Tatra
Vehicles,
Systems, Unmanned Aerial Electric Panels, Simulators

Vehicles, Ground Defence
Systems
Present Market Shares (%)
Israel
Aerospace
Industry Hindustan Aeronautics Ltd.
23.56, Elbit Systems 33.53,
26.45,
Sol tam Systems 9.67,
13.4, Bharat Earth Movers
Israel
Military
Industry Ltd.
Group 13.12
Technological Advancement
Due
Bharat
Dynamics
19.67,
Bharat
Electronics Ltd. 26.67
to
technological Large share of investment in
enrichment Israel plays major research and development of

role in global scene, Elbit defence industry, Expertise
systems provides different in
radars
and
electronic
innovative variants of UAVs systems

and defence arms, Expertise
in unmanned aerial vehicles
Barriers
Poor
political
Insufficient
condition
information
Mandatory offsets for
transparency
all
defence
transactions
Corruption
Project
implementation
Requirements of Resources
Lack of technology
Resources in case of Israeli Mainly

defence system is obtained resources
from
different
channels, expertise
required
viz.
and
human
skilled
employees,
Management
Information different
system,
authorities, material for radars, aircrafts
Govt.
defence regulatory bodies, and helicopters.

etc.
TABLE 1.1
procurement
1.12 COMPARISON OF DEFENCE FIRM:

Company
Products
Service
Net Income
Type
Expert in
Elbit Systems
Defence
Remote
$ 183.5
Public
Unmanned
Electronics,
Accessing
million
aerial
Radio
and
(2010)
vehicles,
communications
satellite
Remote
launching
systems,
Unmanned
weapon
aerial
systems
vehicles,
Remote
weapon
systems,
Radar,
Naval systems
$ 290.4
Public Sector aero-
controlled missile,
million
Undertaking
Torpedo
Counter
(2010)
Measure
System,
Bharat
aero-dynamically
Dynamics
Limited
None
dynamically
controlled
missile
Infra-Red
Interference
Indicator
TABLE 1.2
10
Company
Products
Service
Net
Type
Expert in
Private
Fire
Income
Soltam Systems
Artillery,
Mortars, Fire Safety $150
Ammunition,
Fire Training,
support system
Bharat
system
Million USD
(2011)
Earth Earthmoving
Movers Ltd.
None
equipment,
US$920 milli
Public
Sector Earthmoving
on) (2010)
Undertaking
equipment
Underground mining
equipment,
Railway
High
equipment,
power
diesel
engines,Heavy
duty
hydraulic aggregates
Overall Findings
There are four major players in defence industry of Israel that are Israel Aerospace
Industry Limited, Elbit System, Soltam System and Israel Military Industry Limited.
Elbit System is most innovative and advanced company in Israel and they are high
exporter of among the country.
support
Israel exports a wide range of defence products including ammunition, defence

electronics, small arms, artillery, armoured vehicles, and sophisticated land and air
defence systems. During 2007-2011, sensors, armoured vehicles, and missiles were
the three most exported defence goods, with market shares of 32%, 22.8%, and 22.8%
respectively.
11
1.13 :
Market Landscape:
The Indian defense industry is one of the fastest-growing global defense markets. Indias
defense capital expenditure, which refers to the part of the defense budget that is spent on the
acquisition of all types of military hardware and technology, has grown at a CAGR of
16.22% over the review period.
In 2012, India was allocated US$15.36 billion for defense capital expenditure in the budget.
Defense expenditure is expected to record a CAGR of 13.35% during the forecast period, to
reach an annual expenditure of US$69.41 billion by 2017.
This is primarily due to the countrys aging military hardware and technology, which is in
need of replacing, and demands for defense against domestic insurgencies and hostility from
neighboring countries. The strong growth in the industry is attracting foreign original
equipment manufacturers (OEMs) and leading companies from the domestic private sector to
enter the market.
Moreover, terrorism is leading to sharp increases in the defense budget and a shorter sales
cycle, which offers an attractive market for defense manufacturers.
Demand of Equipment
The country is especially expected to demand unmanned combat aerial vehicles (UCAVs),
advanced electronic warfare systems, combat systems, rocket and missile systems, fighter and
trainer aircraft, stealth frigates, and submarines during the forecast period. In addition, its
expenditure on IT and communications is expected to increase significantly, with a strong
focus on enterprise applications, systems integration, and real-time mobile communications.
The country relies upon imports to procure defense equipment with advanced technology,
and, since most of the equipment India is seeking use is advanced technology, there will be a
significant prospect for foreign OEMs to enter the Indian defense market.
Growth:
12
Government spending on Indias homeland security market has increased significantly as a

result of terrorist attacks, the smuggling of arms and explosives, and domestic insurgency. In
2012, the countrys homeland security budget registered an increase of 13.4% over the
previous year, with the Central Reserve Police Force (CRPF) receiving the largest share of
the budget.
Due to the nature of the security threats which the country faces, the main opportunities for
growth in homeland security are expected in the aviation, mass transportation, and maritime
security markets. Following the increase in both domestic and foreign terrorist attacks,
spending is expected to increase in surveillance technology, global positioning systems,
radars, and biometric systems
1.14 Gap Analysis:
Table 1.3
Country
Indian defense industry
Strength
Weakness
Satellite
Shotguns and rifles
communication
Marine weapons
Electronic Devices
Security training
Radars
Navigation Systems
Aerospace
and
combat systems
Helicopters
Missiles
Israel defense industry
Submarines and Naval
UAV
Missiles
System
Ground Defence
Radars
Robotic Technology
Trucks and Vehicles
Arms and Armours

Aerospace
Helicopters
13
and
Analysis:
From the above table we can see that Israel always in the requirement of the different kind of
satellite and missiles. At the side firms like Bharat Dynamics Limited and Bharat Electronics
both are experts in that field. So there is a huge for both the firms to export their products in
the Israel.
The table also shows that India does not have the proper submarines and Navigation systems.
Because of this shortage Indian defence is lack of different operations and programmes
related to Navy .Firms like Elbit System and Soltam System are major product line of Naval
Systems, So we can easily import these products from Israel.
14
CHAPTER 2
Electronic Industry of
Israel
15
2.1 INTRODUCTION
Though Israel is a tiny nation with restricted resources, responsible fiscal and monetary
policies and a mass of reforms designed at liberalizing the economy, have permitted it to
position out as one of the most competitive economies. According to the IMD rank Israel
stands 19th in the list of the worlds most economically urbanized nations in its 2012 world
Competitive Yearbook.
Over the past decades, Israels economic growth can be attributed to resilient growth in
sectors of telecommunications, water and environment, information technology as well as
electronics and life sciences. Its capability for innovation attached with highly-educated
andskillfulemployees have played a major role in its rating as a high tech center to the world.
FDI in Israel has reached $5.1 billion in 2011. Over the last decade, Israel economy has
shown robust average GDP figures of over 5 %. The hi-tech sector is estimated to be
contributing 17.3% directly to the overall GDP. The exports account to $64.74 billion of
which almost 80% is contributed by the hi-tech sector in Israel. The hi-tech sector in Israel
has led to employment of about 38,000 skilled professionals in various facilities across Israel
leading to decrease in the unemployment levels by 3.5% in 2011.
2.2 THE ELECTRONIC INDUSTRY IN ISRAEL
Israel with a population of 7 million people with a gross domestic product of (GDP)
of about US$ 140 billion, serves as a major contributor to worlds innovation in a
broad range of science and technology fields.
Israel is one of the most prolific centers of high-technology innovations in the world.
Israel has soon established itself as the Silicon Valley of the east.
Israels technology sector is based on start-up companies, whose proliferation has

spawned a financial community of venture-capital (VC) firms to invest in start-ups.
Israel is second only to U.S. in terms of listings on NASDAQ.
Information and Communication sector serves as the core of the Israels Hi-tech
industry. In the last decade, Biotechnology has increasingly grown in importance in
terms of its contribution to the Hi-tech industry in Israel.
The sectors emerging in the Hi-tech domain of Israel include nanotechnology and
cleantech.
16
Specific national government policy decisions involving R&D in S&T are key factors
in the emergence and continued flourishing of Israels hi-tech cluster. Israel pursues
an industrial policy in which R&D-based, product-oriented innovation and
entrepreneurship are seen as central to economic development. The government offers
various kinds of support, not only for R&D in the business sector but also for the
creation of new businesses.
The State of Israel has shown great resolve in pushing for foreign investments through
its competitive taxation system , tax benefits and grants to foreign investors and by
creating interfaces for collaboration between Israeli industry and multinational
companies. For this the Isareli government has formulated a Encouragement of
Capital Investment Law by which the Government of Israel extends tax benefits
exemption from taxes and reduced tax rates. On similar grounds, Ministry of Industry,
Trade and Labour offers funding programmes to encourage the opening of centres in
the periphery and programmes for assisting in professional training. The Office of
Chief Scientist (OCS) aides the industrial R&D in Israel and offers conditional grant
programmes at upto 50% of total cost of the programmes.
The Investment Promotion Centre ( IPC) of the Ministry of Industry, trade and
labour operating alongside the Foreign Trade Administration has taken up the
responsibility of promoting FDI in Israel by closely working with potential and
current investors serving as a one-stop destination for investment related information.
Over the last three years, more than 250 foreign investors have taken the advantage of
the Centres assistance.
With ample encouragement from the government, technology giants from around the
world continue to establish their business development centers in Israel.
The reason that major multinational giants like IBM, Intel, SAP, Warner, Google etc
have invested in Israel can be attributed to six reasons :
i. Availability of quality human resource
ii. Israels position as a centre for technological innovation and excellence
iii. Innovative spirit of the Israeli society
iv. Maturity of the markets
v. Competitive research costs
vi. Encouraging government policy
17
Israels hi-tech sector has emulated various trade-practices from their American
counterparts resulting in intimate relations between the Israeli hi-tech sector and the
U.S. financial and industrial world.
In the area of military technology, Israel is the worlds major exporter, with
unmanned weapon technology, missiles and small satellites being its key strengths.
Though Israel is a tinynation with inadequate resources, liable fiscal and monetary
policies and a host of reforms aimed at liberalizing the economy, have permitted it to
stand out as one of the most competitive economies. According to the IMD rank Israel
stands 19th in the list of the worlds most economically urbanized nations in its 2012
world Competitive Yearbook.
Over the past decades, Israels economic growth can be attributed to resilient growth
in sectors of information technology,telecommunications,electronics and life sciences
as well as water and environment. Its ability for innovation attached with highlyeducated and skilled workforce has played the major role in its ranking as a high tech
hub of the globe. FDI in Israel has reached $5.1 billion in 2011. Over the last decade,
Israel economy has shown robust average GDP figures of over 5 %. The hi-tech
sector is estimated to be contributing 17.3% directly to the overall GDP. The exports
account to $64.74 billion of which almost 80% is contributed by the hi-tech sector in
Israel. The hi-tech sector in Israel has led to employment of about 38,000 skilled
professionals in various facilities across Israel leading to decrease in the
unemployment levels by 3.5% in 2011.
The major players in the hi-tech industry in Israel are as given:

1) IBM
2) Motorola
3) Intel
4) Microsoft
5) Applied Materials
6) Cisco Systems
7) Hewlett-Packard
8) Alcatel Lucent
9) GE Healthcare
10) BMC Software
18
11) CA Technologies
12) Phillips electronics
13) Broadcom
14) Marvell Technology Group
15) Siemens
16) SAP AG
17) EMC Corporation
18) Sandisk
19) Micron Technology
2.3 ELECTRONIC INDUSTRY AND TRADE POLICY: ISRAEL

Electronics industry represents Israels prominent and major export sector with ultramarine
sales of more than $20 billion per year, more than half of the countrys industrial exports. The
Isareli electronic industry was initially focused around defense technologies, like India, but
over the sector has witnessed multi-faceted commercial applications over the years in the
areas such as telecommunications, medical systems, industrial equipment and components.
Israels electronic industry is progressing in developing systems and solutions for the
following areas: micro-electronics, semiconductors, communications, internet applications,
IT, medical services and diagnostic systems, smart cards, electro-optics, test equipment,
industria; control, textiles, printing, agriculture, defenses electronics, aerospace systems,
computerized and peripheral equipment, homeland security systems and equipment, water
technologies and cleantech.
Various major international giants have entered Israel seeking investments and strategic
alliances which includes companies like Intel, Motorola, Microsoft, CA, IBM, Cisco, Texas
Instruments, HP, google, GE, Phillips, Kodak
and Siemens.In the field of software
development, Israel has emerged as a major international power with a world-renowned

reputation as a design centre. In start-ups, of which Israel has the largest attention outside of
the US, medical electronics, electro-optics and semiconductor equipment feature prominently
as well as software.
REGULATORY ENVIRONMENT AND TRADE POLICY

19
(1) ITA-I under WTO:
Israel has been effectively advancing reforms in all the elements of the internet,
communication and entertainment sector. Being a signatory to the information techno of the
WTO. With effect from march 1st , the custom duty on the specified to the 217 items has been
eliminated in industries licencing has been virtually abolished in the electronics an it sector.
Expect for manufacturing electronics aerospace and defenceequipments. There is no
reservation for public sector enterprise in the electronics and IT industry and private sector
investment is welcomed in every area.
(2) Foreign Investment Policy:
The government of Israel over the years has been steadily following the policy of
liberalization slowly opening up the economy for global investments. The Government has
shown tremendous resolve in encouraging Foreign Direct Investments in the country by
setting encouraging policy framework and providing an array of benefits and incentives to
foreign investors to boost Industry & commerce in the country.
According to Israeli law, prior government approval is not necessary except for investments
regulated sectors like banks. Israel follows restrictive policies only for investments in
strategic sectors.
The major avenues for investment in Israel are Electronics & Telecommunication,
biotechnology and medical instrumentation. Israel has seen major investments in the
technology sector with global giants like Microsoft, Cisco, Intel, Siemens, Motorola, HP etc.
setting up state of the art R&D facilities in Israel.
2.4 ELECTRONIC INDUSTRY AND TRADE POLICY: INDIA

The electronic revolution started in India in and around 1965 with its major focus on space
and defense technologies. 1982 turned out to be a significant year for the consumer
electronics sector with the development of television in India.
Currently the Indian electronic industry is rising at a brisk pace with a predicted growth of
close to 400 billion by 2020. The largest segment in the consumer electronics section happens
to be electronic components. However the consumer electronics industry in India is miniscule
20
compared to the international market against a rapidly growing market for consumer
electronic products in the country.
Currently India is an exporter of various electronic products namely:
Display Technologies
Entertainment electronics
Optical storage devices
Passive components
Electro-mechanical components
Telecom equipment
Transmission and signaling equipments
Semi-conductor devices
REGULATORY ENVIRONMENT AND TRADE POLICY
(1) ITA-I under WTO:

India has been successfully boosting reforms in all the components of the internet,
communication and entertainment sector. Being a signatory to the information techno of the
WTO. With effect from march 1st , the custom duty on the specified to the 217 items has been
eliminated in industries licencing has been virtually abolished in the electronics an it sector.
Expect for manufacturing electronics aerospace and defenceequipments. There is no
reservation for public sector enterprise in the electronics and IT industry and private sector
investment is welcomed in every area.
(2)Foreign Investment Policy:
Foreign Corporation can begintheir functions in India by registration of its company under
the Indian companies act, 1956. The Foreign equity in such kind of Indian company can be
up to 10% at the time registration, it is essential to have all the project details, partners, local
partners, structure of the company and management, structure of the shareholding pattern.
Registration is a kind of correctness and it takes about weeks,. It can forge strategic
association with an Indian partner.
21
A joint venture involves the advantages of stabilized contracts financial support and
distribution making network of Indian pattern. Approval of foreign investment is done either
automatic route government approval.
2.5 LEGAL ASPECTS APPLICABLE IN ELECTRONIC INDUSTRY

The national authority responsible for legislation regarding waste management is the Ministry
of Environment and Forests (MOEF). Hazardous waste management laws do not cover
electronic waste and local governments, who are responsible for the collection and disposal
of municipal solid waste, do not participate in the collection and disposal of e-waste.
INDIAN LEGISLATION
In India electronic waste is managed under the Hazardous Wastes Amendment Rules, 2003
which amends the original rules, namely the Hazardous Wastes Rules, 1989. Section 3 Part A
on List of Waste Applicable for Import and Export which includes List A1: Metal and Metal
Bearing Waste lists out items related to electrical and electronic products, lead acid battery,
cathode ray tubes, PCBs, capacitors etc. these are the main items used in electronic industry.
WEEE legislation Rules, 2006, is being drafted and was presented for deliberations at the
National E-Waste Legislation Workshop on May 2006 which was made by the Ministry of
Environment and Forests (MOEF), Government of India and German Technical Cooperation
(GTZ).
The companies like Wipro InfoTech, Bharat electronic limited and HP have taken the
initiatives for E-waste management. There are two e-waste recyclers in Bangalore have been
authorized to set up commercial ventures to recycle e-waste. These two are E-Parisaraa and
Ash Recyclers.
ISRAELI LEGISLATION
The weight of electronic and electrical waste in Israel was estimated around 85,000 tons in
2010 and is known to increase at a higher rate than the annual increase in solid waste in
general.
On June 16, 2011, the Ministry of Environmental Protection disseminated a law
memorandum on the ecologicalaction of electronic equipment. According to this law, liability
22
will be forced on manufacturers and importers of electronic products in Israel to funding the
assortment and management of their market share worth of the waste.
Main provisions of this law:
Producers and importers of batteries will have to reach a 50%-75% recycling level.
A manufacturer or importer of electronic equipment will be requisite to gather

electronic waste at a rate of 65 percentages.
Businesses promotion electronic products will be requisite to receive back the waste
of electronic products at the time of purchase of the new products.
Opening in 2020, the land substantial of electronic equipment squander which is not a
byproduct of approved recycling will be expelled.
The law sets values for gathering and action in sorting and recycling amenities.
Producers or importers will arrange and issue guidebooks for ecological treatment and
training for use again for every type of electronic equipment they put up for sale.
2.6 PRESENT TRADE OF THE ELECTRONIC INDUSTRY: ISRAEL

In the 1980s, high-tech industries established the maximumconsideration from the
government. In spite of the achievement of the electronic industry in 1980s, the experts
predicted that in the 1990s this segment will face lack of technicians and engineers.
Israel's electronics industry is one of the country's leading high-tech sectors plusin addition
plays a major task in the achievement of two extraforemost industrial sectors: medical
devices and communications, with exports within these areas getting $3.3 billion in
2004.Israel is one of some nations of its size with throughout capabilities in the electronics
industry.
Production declined by a forecasted 4.6% in 2009 in response to the slowdown in the global
economy but was stronger than originally forecast due to a stronger second half of the year.
Growth in 2010 is forecast to reach 7.0% on the back of the recovery in global trade although
there remains some downside risks, in particular a potential slowdown in Europe. Electronics
production grew rapidly throughout the 1980s and early 1990s, initially due to the need to
invest in sophisticated and complex electronic systems for defense purposes.
23
With the focus of the Israeli industry on high technology products there are a growing
number of start-up companies, in particular in the communications, IT and defense sectors.
Users requiring more extensive data requirements should refer to the full Yearbook Series, a
unique reference to electronics market and production data on 51 countries worldwide.
"It is a key business tool for financial or management consultancies requiring a reliable
assessment of a specific country or regional market or who needs to analyze a product group
by geographical market.
"Ensuring consumer protection and well-being through legislation, direct Ministry
intervention, and encouragement of consumers' organizations.
2.7 PRESENT TRADE OF THE ELECTRONIC INDUSTRY: INDIA

Consumer Electronics/ durabledivisioncontinue to be the main stay of the electronic industry
of India, contributing about 32% of the whole electronic hardware inventions.The high
expansion in PC sales is credited to enlargedutilization by Industry verticals such as Retail,
Banking and Financial Services, Telecom, Education, BPO/IT, and Manufacturing -enabled
jobs as well as chief e-Governance initiatives of the Central as well as State Governments.
Have power over, Industrial and Instrumentation Sector. This is currently a grown industry
sector in the nation at least as far as a variety ofrequest segments is alarmed.The allocation of
private division in telecommunication industry has enlarged to more than 57 %plus the
involvement of mobile telephony has gone up to 63 % on December, 2007.Noteworthy
developments happened during the year in the region of color picture tubes and color glass
parts.Additional CPT producer successfully launched pure flat tubes manufacture, foremost
to accessibility of flat tubes as of three originalsources.Twoadditional lines were specially
madethroughout the year, one used for manufacture of huge size flat color picture tubes and
the second used for small size.
The center of expansion was in optimizing the Plasma Display Cell intends to accomplish the
preferred parameters of Contrast as well as Brightness, achieving high ratereaction times
moreover parallel designing the Scan and continue driver boards to match the Panel
24
parameters.The color glass parts producer implemented chiefdevelopment of its ability to

meet enlarged local necessity due to substantial growth in CPT production.All IT and
Electronics products, in general, are generously exportable, by the omission of a little
negative list which includes items such as high end super computer, data processing security
equipment and high power microwave tubes,.
The export pressure under EPCG Scheme can also be fulfilled by the delivery of Information
Technology Agreement (ITA-1) items to the DTA provided the realization is in free foreign
exchange.The import of second hand computers including personal computers and laptops are
restricted for imports.
2.8 TECHNOLOGICAL SCENARIO

Israel for many years, may it be any industry was strong in research and innovation. Israel has
always promotes the commercial sale of innovative technology. The way adopted was
creation of science-based industrial parks established near university campuses which provide
initial services and facilities to fledgling science-based industries, which are carefully
screened before being accepted. Moreover, the government often provides loans, investment
incentives, grants and tax benefits to industries moving into the parks.In addition to these
parks, to boost the development of innovative ideas by entrepreneurs, technological
incubators were introduced in 1991 which brought about 65,000 engineers to Israel, many of
them lacking capital and experience with the workings of a free enterprise economy, however
experts in their field.Themain task of the incubator, being an independent, non-profit entity,
was to assist entrepreneurs to complete their projects and convert them into viable
venturescommercially. It performs marketing activities and feasibility studies, provides
assistance in recruiting R&D staff and provides professional and managerial guidance and
assistance in recruiting investment capital along with much needed physical facilities.
In India, the Electronics Industry lifted off around 1965 with an orientation towards space
and defense technologies. This was followed by developments in consumer electronics
mainly with transistor radios,Calculators, Black & White TV, and many other audio products.
Remarkable developments took place in the area of colour picture tubes and color glass parts
followed by pure flat tubesduring the year.Colour Televisions soon followed. 1985 saw the
advent of Computers and Telephone exchanges, which were succeeded by Digital Exchanges
25
in 1988. The period between 1984 and 1990 proved to be the golden period for electronics
during which the industry witnessed rapid and continuous growth. Pressure on the electronics
industry sustained though growth and developments have continued with digitalization in all
sectors, and more recently the trend towards convergence of technologies. India's focus
shifted to software due to software boom in mid 1990s. In order to establish an extensive
source of knowledge to serve Indian Engineering and Electronics Industry and cultivate a
manufacturing culture in the country, ELCINA formally launchedon 21st June, 2008, Center
for Knowledge Management (CKM). CKM is formed to guide and empower industry to
focus on the right management and quality tools that enables it to produce high quality
products at the lowest cost which at the same time are environmental friendly. This is done
by using relevant technology for competitiveness. ELCINA-CKM has successfully conducted
various programs on different topics since the launch in June 2008.As per requirement of
companies in-house training programs are also being organized.
In recent years the Indian electronic industry is growing at a brisk pace. The largest segment
is the consumer electronics segment. While the largest export segment is of components. The
demand in the Indian market is growing speedily and investments are flowing in to augment
manufacturing capacity. Penetration levels in telecom as well as other high growth products
are equally high. The increase and growth in demand for Computer/ IT products, medical ,
auto electronics, as well as consumer electronics, industrial products is equally brisk.
Combined withIndian economy growing at an impressive 7 per cent per annum and low
penetration levels, it offers an excellent to electronics players,worldwide.This growth has
attracted global players to India and they have made large investments to access the Indian
market. Also, ELCINA has taken initiatives for establishing the first two Electronic
Manufacturing Clusters in India: the first in Chennai Andhra Pradeshand the second at
NCR (proposed in Bhiwadi, Rajasthan) to revitalize the electronics manufacturing sector and
give it the much needed boost. It is expected to extricate us from the vicious cycle of high
imports and low value added manufacturing.
TECHNOLOGICAL DEVELOPMENTS
Technological Education:
26
In the last few years, the leaders of Israel's educational system have realized that
technological developments have created a gap between modern adult society and the school
environment. Furthermore, if Israel's advanced technological level is to be maintained and
enhanced in the future, scientific know-how - and familiarity with modern tools - must be
introduced to children as early as possible. To narrow this gap, there was an introduction of a
revolutionary program to saturate the schoolswith computers. The program was aimed at
upgrading the teaching of mathematics, science and technology throughout the school
system.
Telecommunications:
Advances in Israeli Telecommunications include state-of-the-art products for wireless

communications and products that can improve cellular phone communication and create its
own digital wireless network systems for mobile voice/data and dispatch communications
services.
For India, the growth in demand for telecom products has been exciting and India is seeing an
addition of millions of mobile phone users every month. This growth is expected to continue
at least over the next decade with telecom penetration of around 10 per cent.
Medical Electronics:
Israel's expertise in electronics,emphasis on R&D anda strong tradition of medical practice

has combined to form an influential though small medical electronics industry, which is
successful in diagnostics.
Software/Hardware:
Educational software is one of the fastest and newest growing fields. Products of Israel's
software houses also include computer-aided production engineering software for automated
production systems and an automated data-entry program for creating advertisements. Other
developments include programs for kindergartens that develop visual and reflective thinking,
optical orientation, sense of color and basic mathematical concepts.
India is well-known for its software prowess.Many giants have been successful in software
creations and created a unique position worldwide in terms of software business.But on the
hardware front, the progress is rather slow. However, the country has been making gains in
this sector also. Moreover the steep fall in custom tariffs made the hardware sector suddenly
27
vulnerable to international competition. The growing domestic IT market has given impetus
to manufacturing in India. There have been newer investments in hardware manufacturing
along capacity expansion by the existing players. India is also high on the agenda of
electronics manufacturing services companies. Already, 50 Original Design Manufacturers
(ODMs)/Electronics Manufacturing Services (EMS) providers are operating in India, ranging
from global players including Solectron and Flextronics to indigenous firms including
Deltron, SahasraandTVS Electronics.Further moves are expected to add production in India
in the coming yearsby international players. Indias contract-manufacturing business is
expected to nearly triple in revenue over next fewyears,agrowth that will present both
opportunities and potential pitfalls for the worldwide electronics supply chain.
Semiconductor suppliers are expanding their manufacturing activities to serve the growing
contract-manufacturing industry in India.
According to one industrialist "Israel now has a critical mass in high technology that is far
ahead of anything in Europe." Like many others, he believes Israel is on the high-tech map to
stay.
2.9 PATTERNS OF CORPORATE INVESTMENT: ISRAEL
The investments by global corporate houses has taken varied forms which includes various
venture capital infusions, collaborations between Isareli and overseas companies,
establishment of new companies by means of acquisitions of Israeli start-up companies and
also establishment of R&D centres by multinational companies. Israel in the years has
developed into a major player in the world of global investments.
Included in the impressive list of investments that have taken place in Israel is the sizeable
acquisition of Mercury Interactive Corp by HP for $ 4.5 billion, converting the Mercury
facility in Yehud into a software R&D centre with 800 employees. Berkshire Hathaway also
acquired 80 % of Iscars shares for $ 4 billion, which was the first of its kind acquisition
outside USA by the firm.
In addition, there is a new trend of acquiring Israeli start-up companies, which often then
become the development centers of the global mother companies. Corporate giants like
Samsung and AT&T have made significant investments this way. German company SAP had
also started activities in Isarel in 1998 by investing in Ofek-Tech.
28
For large electronic giants like Microsoft, HP, Intel, applied Materials , Motorola, major
investments into Isarel have come by the way of establishment of state-of-art R&D facilities
to leverage the availability of the highly skilled labor for the same. In Isarel today,
multinational companies operate more than 120 R&D centers that contribute to the
enhancement of human resources in Israel, including management and development of
markets, thus making them a significant element of the value chain of the parent companies.
2.10 REQUIREMENTS OF RESOURCES
The main electronic components, used in electronic industry, are chip resistors, chip
capacitors, Diodes, transistors, inductors, fuses, ICs, USB connector, 7 segment displays,
LEDs.
Indian condition:
Two-thirds of domestic electronic components are imported, the bulk of which are from
South-East Asian countries. The total electronics components industry was over Rs 48,000
crore (USD 9.2 billion) during financial year 2010, out of which over 60 percent was met
through imports. Furthermore, value totaling in locally manufactured components was low
down because of the high reliance on imported inputs and raw materials. As a result, actual
local content met less than one third of total demand.
India manufactures of components in compliance to global standards which are widely
exported to the customers in Europe, USA & Far East. Excellence approvals are approved by
recognized international agencies (i.e., DNV, STQC, TUV, BVQI and LRQA) - a govt. body
renders essential support to Indian companies through its 22 labs located across the country.
Israeli condition:
9.2.1 Israel condition for electronic components:
2008
2009
2010 (est.)
Total Market Size
830 (-14.5%)
656 (-21%)
997
Total Local Production
1,368
1,081
1,513
29
Total Exports
1,308
1,033
1,446
Total Imports
770
608
930
Imports from the U.S.
214
169
250
Units: Millions of U.S. dollars. Source: www.technologies.co.il

TABLE 2.1
In 2010, Israeli market almost reached the $1 billion with a market worth of $997 million.
There is an augmented requirement for passive components and RF. Israel is a foremost
importer of electronic apparatus. Total imports still totaled $930 million, in which
approximately 30% of it coming from the U.S. Even thoughthe U.S. remains one of themain
components suppliers of Israel, Asian companies are proving strong competitors. The
companies like General Electric, Microsoft, IBM, Vishay, Intel, Applied Materials,HP and
National Semiconductor have taken benefit of Israels technological expertise by
establishing R&D services and manufacturing plants in the country. Israel offers
opportunities for U.S. exporters of semiconductors, power amplifiers, RF & microwave and
active components.
2.11 INVESTMENT CLIMATE IN ISRAEL
Israel is parliamentary democracy and enjoys a diversified economy. Services,

basically financial and business, build up the primary part of the Israeli economy.
Israel in the recent years has seen tremendous developments and manufacturing
activities in the field electronics, communications and other technology-driven
industries.
However Low technology oriented industries like chemicals, plastics and food are
also important and traditionally made important contributions to sustain the economy.
As such, Israel derives it competency from Research & Development (R&D) in which
holds significant comparative advantage over the other countries, stemming from
superior education and encouraging policies set up by the Israeli government.
Israels weakness lies in its inadequacy of natural resources. It becomes necessary to

import raw materials and many other goods and services. The country therefore,
depends on its exports to pay for such goods and services.
30
Israels major imports include investment goods like heavy machinery and vehicles,
raw materials and fuel. Israels major exports are electronics, software, diamonds and
chemicals.
The Electronic & telecommunication sector in Israel is soon emerging as the most
important sector of the economy with government fueling many important R&D
activities in the country.
TAX INCENTIVES IN ISRAEL

The government of Israel has shown its commitment to encouraging the growth of FDI by
a series of regulatory changes as given:
The government has reduced both tariff and non-tariff barriers
It has reformed the tax framework by reducing labor tax, income tax and corporate
tax.
It has offered investment grants, tax benefits and exemptions to boost foreign
investment through the Law for Encouragement of Capital Investments
The government grants conditional R&D grants of up to 50% of approved

programs under the Law for Encouragement of Capital Investments.
The corporate taxes has decreases from 25 5 in 2010 to 24 % in 2012 to foster the
industrial growth and foreign investment in the country.
The office of the Chief Scientist (OCS) provides expert assistance to the industry
for promoting R&D activities in the country.
EXCHANGE CONTROLS
In Israel transactions in all types of foreign currency is permitted except for those
restricted under law or due to some specific reasons. So, as such there are no foreign
currency restriction in Israel
WHY COMPANIES SHOULD INVEST IN ISRAEL

Various reasons as to why companies should invest in Israel is:
A talented workforce
Thriving technology sector
High acumen of scientific research
31
Infrastructure and supportive government policies.
Because of these various reasons favorable to industry giants like Microsoft, Cisco,
IBM, Intel, etc have already established R&D centers in Israel.
Entrepreneurial Spirit
Israel has emerged as a very important center for start-up enterprises. The countrys
strong technology orientation clubbed with entrepreneurial spirit to innovate and
strong R&D credentials have elevated Israel as the next entrepreneurial hub of the
world. Of the many Israeli entrepreneurial undertakings to become global success
stories are Checkpoint and Teva Pharmaceuticals.
Track Record
Israels impeccable track record has in particular attracted the attention of the global
investment community. Israeli government have shown tremendous resolve in
formulating policies so as to make the investment climate in the country encouraging
and attractive. FDI grew from 4600 million in 1993 to 415 million in 2007. The total
venture capital investments in Israel have grown in excess of $11 billion. Israel
resolve has been rewarded by the International credit rating agencies who have
consistently sustained its credit rating and affirmed their confidence in Israels
economy.
Always Innovating
Israels R&D investment per GDP is the highest in the world. Entrepreneurship and
innovation deeply rooted in the country. Israel has constantly shown a great resolve
and commitment in supporting and nurturing entrepreneurship and innovation. Israels
many high tech incubators have been constantly supporting young companies with
200 active projects and over 735 small projects in the past years.
Top Academic Education

The root to high graded entrepreneurship and innovation in Israel lies in the strong
education background that the country possesses. Israel has the worlds most educated
32
workforces. Israel holds enjoys the worlds highest ratio of qualified engineers in the
workforce. It also enjoys the worlds highest ratios in terms of University degrees and
academic publications per capita. Israels premier education institutions have
constantly featured among the worlds best education institution making it one of the
preferred destinations by students pursuing quality higher education.
Solving Problems and Creating Opportunities

Israel features in the list of the countries dedicating the highest percentages of their
economic activities to fund R&D activities. Israels best innovations have resulted by
convergence of excellent problem solving skills with exceptional creativity.
Exceptional R&D activities supported by a highly trained pool of researchers and
engineers have resulted in Israel developing some cutting edge technologies
especially in the field of defense.
2.12 OPPURTUNITIES
The State of Israel has shown great resolve in pushing for foreign investments through its
competitive taxation system, tax benefits and grants to foreign investors and by creating
interfaces for collaboration between Israeli industry and multinational companies. For this the
Israeli government has formulated an Encouragement of Capital Investment Law by which
the Government of Israel extends tax benefits exemption from taxes and reduced tax rates.
On similar grounds, Ministry of Industry, Trade and Labor offers funding programmes to
encourage the opening of centres in the periphery and programmes for assisting in
professional training. The Office of Chief Scientist (OCS) aides the industrial R&D in
Israel and offers conditional grant programmes at upto 50% of total cost of the programmes.
The Investment Promotion Centre ( IPC) of the Ministry of Industry, trade and labour
operating alongside the Foreign Trade Administration has taken up the responsibility of
promoting FDI in Israel by closely working with potential and current investors serving as a
one-stop destination for investment related information. Over the last three years, more than
250 foreign investors have taken the advantage of the Centres assistance.
33
Israeli government has shown great resolve for encouraging Foreign Direct Investment into
the country. Israel has shifted to a liberalized economy through a series of regulatory
changes:
Liberal foreign currency regulations easing the raising of capital in Israel and abroad.
Reduced Tax laws to reduce labor tax, capital income tax and global taxation.
Reduced tariff and non-tariff barriers
Created incentives for investment in technology sector especially R&D.
Has set up privatized state-owned companies to promote the growth of the private
sector and enhance competitiveness.
FEASIBILITY ANALYSIS OF ISRAEL AS INVESTMENT DESTINATION FOR

INDIAN COUNTRIES
The various parameters that define the feasibility of te investment climate in any country are
Stability of government policy
Tax Rates
Corruption
Cost & access to finance
Availability of Quality Manpower
Courts and legal system
Infrastructure
Labor regulations
a) Political Stability:
34
The government of Israel has faced internationally criticism following its policy regarding
various contemporary issues. The Israeli politcal system has been under constant turmoil
folowing a volatile policies regarding the issues of Gaza strip and Jerusalem.
b) Tax Framework:
Israeli Government has devised two programs to a aide the investment climate in the country.
i.
Government Grants
ii.
Tax Benefits
GOVERNMENT GRANTS
For the companies to qualify for the government incentives they need to comply with certain
qualifying criteria, which includes international competitiveness, bottom-line of investments
and registration of company in Israel. Once companies comply with the same they gain the
Approved Enterprise status.
The government grants given is calculated on the original cost of land, building, M&E and
other related expenses.
The government grants are as given:
Size of projects
Grant
Industrial projects up to 140 million NIS
24%
Industrial projects up to 140 million NIS
20%
Investment in hospitality sector
24%
Investment in other tourist enterprises
15%
35
Tax benefits are provided for a period of 7 years from the year taxable income is earned, by
companies choosing the grants program. Approved Enterprises in which 25% or more stakes
are held by foreign investors are eligible for a 10 year period of tax benefits.
Tax rates by percent of ownership stakes
90-100%
74-90%
49-74%
Less than 49%
Taxable Income
100
100
100
100
Company Tax
10
15
20
25
Balance
90
85
80
75
Tax on Dividend
13.5
12.75
12
11.25
Total Tax
23.5
27.75
32
36.25
TABLE 2.2
TAX BENEFITS
This includes basically three types of programs:
i.
Alternative Tax setup
ii.
Priority Area setup
iii.
Strategic setup
1) Alternative Tax setup: Under this program the company has a choice of availing tax
exemptions at the cost of general government grants. For investment in Priority Area
A a company can avail 10 years of tax exemptions. For investments in Priority Area
B a company can avail 6 years of tax exemptions and 1 year benefit at 25%. For
36
investment in Central Israel a company can avail 2 years of ax exemption and 5

years benefit at 25%.
2) Priority Area setup:
Benefits for foreign companies in Priority Area A:
Total tax rate of 15%
Corporate Tax rate of 11.5%
Dividend tax rate of 4%
Benefits for foreign companies investing in priority area B
The benefit period as mentioned above is applicable for 7 years. In case of 25

% of the stakes in the company owned by a foreign company, then the benefit
is provided for a period of 10 years.
3) Strategic setup: This program has been setup for MNCs following the criteria given
below:
Annual turnover: At least $3 billion
Minimum investment: At least $130 million
Benefits include total exemption from corporate and dividend taxes

c) Corruption Issues:
Israel ranks 39th in the Global Corruption Perception Index as compared to India which
ranks 94th . This index indicates the level of corruption that is prevalent in the public sector
undertakings in the country. As per the ranks Israel ranks far ahead of India on the corruption
index.
d) Cost and access to finance:
Israels venture capital industry has close to 70 active venture capital funds of which 14 are
international VCs with offices on Israeli soil. In 2011, 546 Israeli high-tech companies
37
attracted $ 2.15 billion, which is 70 % more than $1.25 billion raised in 2010. In the fourth
quarter of 2011, 124 Israeli hi-tech companies raised $569 million.
Capital raised bt Israeli High tech compnies 2007-2011

e) Availability of Manpower
Isarel has the worlds most educated workforce. Israel enjoys the highest ratio worldwide of
engineers in the workforce. Also Isarel ranks top in the ratio of university degrees and
academic publications per capita.
The reason that major multinational giants like IBM, Intel, SAP, Warner, Google etc have
invested in Israel can be attributed to six reasons :
i.
Availability of quality human resource
ii.
Israels position as a centre for technological innovation and excellence
iii.
Innovative spirit of the Israeli society
iv.
Maturity of the markets
v.
Competitive research costs
vi.
Encouraging government policy

f) Courts & Legal System
38
The Israeli legal framework is based on common and corporate law.The Israeli legal system
is based on a three tier system similar to that in India. There are district level/lower courts
which have a specific area of jurisdiction. These are followed by the state/intermediate
courts. The Supreme court is the apex court of the state.
g) Infrastructure
One of the most important features of Israel from the business perspective is modern
infrastructure and services required to conduct business efficiently and effectively.
The highlights of the infrastructure set-ups in Israel include:
Efficient, sophisticated communication systems.
State-of-art transportation systems, with an extensive inter-urban highway network.
Ease of connectivity with the rest of the world both via air and sea.
Reliable energy infrastructure.
Active and sophisticated capital markets.
h) Labor Regulations
The major statutes affecting labor are as given:
Hour of Work and Rest Law: Maximum hours per day permitted is 8.5 hours and
maximum hours permitted for a week is 45 hours
Equal Opportunities Employment Law: According to this law Female workers

need to be paid the equal wages for the similar work
Severance Pay Law: One months pay must be paid for the year of employment to a
person who was employed continuously for one year by the same employer or at the
same place of employment, and has been dismissed.
Minimum Wages to be paid: A full-time employee is entitled to a pay of at least NIS

4100/month.
39
Work Safety Ordinance and the Labor Inspection Law: This employer holds the
responsibility to provide a safe working environment to the workers.
Settlement of Labor Disputes Law: This law calls for the arbitration of disputes that
have not been settled within a given period.
OVERALL FEASIBILITY OF ISRAEL FOR INDIAN-ORIGIN HIGH TECH

INVESTMENT
Parameter/Country Rank
1st
2nd
3rd
4th
Business Expenditure on R&D
Israel
Sweden
Finland
Japan
Total R&D Expenditure as a % of Israel
Sweden
Finland
Japan
Singapore
India
Iceland
Netherlands
GDP
Availability
of
Qualified Israel
Engineers
Venture Capital Availability
USA
Israel
Denmark
Information Technology Skills
Iceland
Israel
Korea
Ireland
Israel
Hong Kong
Japan
Singapore
Israel
Singapore
Iceland
Israel
Flexibility and adaptability of the Iceland

Workforce
Higher Education Achievements
Canada
Co-operation between Universities Switzerland

and Industry
Source: IMD World Report
40
overall feasibility of Israel for Indian-origin high tech investment

TABLE 2.3
41
CHAPTER 3
Tourism Industry of Israel
42
3.1 INTRODUCTION
Tourism is defined as a travel for leisure, recreation, or business purposes. As per World
Tourism Organization (UNWTO) tourists as people who traveling and staying in places
which are outside from their natural environment for not more than one successive year for
business, leisure and other purposes.
Now a day, tourism has become a popular global leisure activity. In 2012, there were over
995 million international tourists arrival worldwide, representing a growth of 5.70% when
compared to 962 million in 2011.
In Israel, tourism is major source of income, with 3.60 million tourist arrivals in 2012. Israel
provides a plethora of religious and historical sites, beach resorts, ecotourism archaeological
tourism and heritage tourism. Israel has a maximum number of museums per capita in the
world. In 2012, the two most visited sites were the grave of Rabbi Shimon bar Yochai and the
Western Wall as well as the most famous paid tourist attraction was Masada. Majority of
tourists visit from the USA, Russia, Brazil, Italy, India, Australia, UK and Africa.
Israel offers a different range of accommodations for all budget and tourist. The
Accommodations division on the Israel Tourism Portal provides complete information on
lodging possibilities and allows tourists to search for accommodation by various type of
accommodation. In Israel, Ministry of Tourism operates more than twenty tourist information
offices throughout country, and many other information centers in North America, Asia and
Europe.
Israeli tourism industry is vibrant and substantial, and the nation is fast becoming a major
worldwide destination. This industry is also one of the great profitable industries in the Israel,
and also recognized with contributing a significant amount of foreign exchange.
Some reasons are cited for the prosperity and growth of travel and tourism industry of Israel.
Economic growth is also driving domestic tourism growth. In Israel, Disposable income has
increased by 10.12% annually from 2001-2012.
Israels growing outsourcing industry and IT industry increase the number of business trips
which are made by foreigners to Israel, which will frequently add a weekend break and
longer holiday. According to the Ministry of Tourism, foreign tourists spend more in in this
43
country than any other country. Tourist arrivals are expected to increase by over 22.0% per
year till 2013, with a 34.0% increase in foreign exchange.
Israel's culture and tourist charms increase the interest of tourists to visit Israel, which also
increase the growth of other sectors like horticulture, handicrafts, agriculture, and
construction.
In 2012, the budget of the Israeli Ministry of Tourism was ILS 865 million. Some 26.5% of
this amount was allocated to marketing, 46.6% to investment incentives, and 16.5% to
infrastructure investment. The ministry received around ILS 5 million for job training. Some
other government offices also contributed ILS 19 million to infrastructure costs. This funding
comes from the general budget of the government. There is a continuous evaluation of all of
the expenditure, and their outcomes. The ministry also collects the information about the
number of new hotels and the progress of infrastructure plans, and monitors the results of its
marketing campaigns.
Direct Contribution of travel and tourism to GDP
The direct contribution of Travel and Tourism to GDP includes the internal expenses on
Travel and Tourism (total expenditure inside a particular country on Travel and Tourism by
residents as well as non-residents for leisure and business purposes) and government
'individual' expenditure - spending by government on Travel and Tourism directly connected
to tourists, such as recreational (e.g. national parks) or cultural (e.g. museums). The direct
involvement of Travel and Tourism to GDP is calculated is based on National Accounting of
tourism sectors such as airports, airlines, hotels and leisure services that is linked with
tourists. The direct contribution of tourism to GDP is calculated on the basis of total internal
expenditure by netting out the buying made by the various tourism sectors.
In Israel, the direct contribution of this industry to GDP in 2011 was ILS21.70bn (2.5% of
GDP). This was increased by 2.3% to ILS22.20bn in 2012. This mainly reflects the various
activities generated by many industries such as travel agents, hotels, airlines and other
transportation services. But it also includes the activities of the leisure industries and
restaurants directly supported by travellers.
In India, the direct contribution of tourism to GDP in 2011 was INR1, 689.80bn (1.9% of
GDP). This was increased by 7.6% to INR1, 818.50bn in 2012.
44
Total Contribution of travel and tourism to GDP

The total contribution of Travel and Tourism contains its broader impacts (i.e. the indirect
as well as induced impacts) on the economy. The indirect contribution contains the GDP
and jobs which are supported by:
Government spending, which aids Travel and Tourism activity in different ways as it
is done on behalf of community at large e.g. tourism marketing, promotion,
administration, security services, aviation, resort area security services etc.
Travel and Tourism investment expenditure significant aspect of both current as well
as future activities that contains investment activities such as the buying of new
airplane and construction of new hotels.
Local purchases of goods and services by many sectors trade directly with visitors
including the purchases of different kind of food and cleaning services by hotels, fuel
and catering services provided by airlines, and IT services provided by travel agents.
Induced contribution includes the GDP as well as jobs supported by the expenditure of those
which is directly and indirectly employed by the Travel and Tourism industry.
In Israel, the total contribution of this industry to GDP was ILS71.10bn in 2011 (8.10% of
GDP) and was increased by1.8% to ILS72.30bn (8.0% of GDP) in 2012.
In India, the total contribution of this industry to GDP was INR5, 651bn in 2011 (6.40% of
GDP) and was increased by 7.3% to INR6, 062.30bn (6.5% of GDP) in 2012.
Direct contribution of travel and tourism to employment
In Israel, Travel and Tourism created 85,000 jobs directly in 2011 (2.80% of the total
employment) and this was increased by 1.0% in 2012 to 86,000 (2.80% of the total
employment). This contains employment by as travel agents, hotels, airlines and other
transportation services. It also contains the activities of the leisure industries and restaurants
directly supported by travellers.
By 2022, Travel and Tourism will create 103,000 jobs directly, rise of 1.9% pa over the next
10 years.
45
In India, Travel and Tourism created 24,975,000 jobs directly in 2011 (5% of the total
employment) and this was increased by 3.0% in 2012 to 25,733,500 (5% of the total
employment).
By 2022, Travel and Tourism will create 30,198,000 jobs directly, rise of 1.6% pa over the
next 10 years.
Total contribution of travel and tourism to employment
In Israel, for employment, the total contribution of Travel and Tourism was 258,500 jobs in
2011 (8.60% of the total employment). This was increased by 0.40% in 2012 to 259,500 jobs
(8.50% of the total employment).
By 2022, Travel and Tourism will support 307,000 jobs (9.0% of the total employment), rise
of 1.7%.
In India, Travel and Tourisms total contribution was 39,352,000 jobs in 2011 (7.80% of the
total employment). This was increased by 2.80% in 2012 to 40,450,500 jobs (7.90% of the
total employment).
By 2022, Travel and Tourism will support 47,911,000 jobs (8.0% of total employment), rise
of 1.7% pa over the period.
3.2 LEGAL FACTORS
The legal factors are the most important driving force of the tourism industry. The tourism
industry of Israel is developed on the backbone of Govt. support and this industry cannot
survive itself without it. The several archaeological places and the sites of historical
reputation, the railways and the roads are all in the hands of the Govt. All the supportive
services like the airlines industry, the hotel industry and the tourist operators are dependent
on the cooperation and the support of the Government.
In Israel, the private sector also plays an important role in the development and growth of
tourism. Though the Central Government as well as some state governments have announced
incentives to include the private sector in tourism, the results achieved have dropped short of
the expectations. To provide a favourable environment for private sector in tourism, it is
essential to realize that the travel & tourism sector is harmfully affected by the absence of
synergy in inter-sectoral plans and policies. The growth of this sector requires co-ordinated
46
and well-integrated policies and stability in the approach. Sometimes arbitrary and
contradictions changes in the policy send confused signs to investors.
Political violence has done significant damage to tourism in Middle East especially in Israel
over the past few years. But the industry experts say that the damage is not permanent. Israeli
governments and industry leaders say that much can be done to restore tattered tourism
reputations.
3.3 WTO
Markets of tourism are opened through the World Trade Organization (WTO) in the services
at the multilateral level as well as regional trade agreements (RTAs) covering the services at
the county level. In Israel, National commitments under these agreements play an important
role in encouraging tourism, which include intraregional tourism among developing
countries. Through reducing the trade barriers, such agreements can improve the gains from
tourism trade to the national economies as well as the firms and employees within them.
Globally, tourism is a USD 3 billion a day business from which all countries at all levels of
growth can potentially benefit from. The global contribution of tourism to the GDP exceeds
5.2% and its annual income has been rising at the faster pace than GDP. With increasing
developing country participation such as India, Brazil etc., tourism has become a main
contributor to the growth of country. Worldwide, tourism ranks fourth after chemicals, fuels
and automotive products. Tourism is one of four top export earners in more than 150
countries including Israel, and in sixty it is the number one export. It is the major source of
foreign exchange for one fourth of developing countries and one third of LDCs, where it
accounts for up to 40 % of GDP.
3.4 ECONOMIC FACTORS
The service economy is driving development in most Organisations for Economic Cooperation and Development (OECD) countries. It denotes a large part of the economic
activities and its importance continues to rise. Tourism which is a large, complex and
fragmented industry, is still very challenging to measure and define, is an important
component of the service economy. In terms of income, OECD countries generate about
70.0% of world tourism activities. Tourism, which has expanded intensely over the past thirty
years, looks set to continue developing as the societies become more prosperous and mobile.
47
In Israel, obtaining good information on tourism services, the least established side of
statistics, is a vital challenge for the statistical agencies as well as a necessity for political
analysis. Measurement of tourism in Israel is part of a broader move to enhance the
knowledge of how economies work, what are they produce and what are the changes occur
over time. Sometimes, it is no longer sufficient to measure physical movements (such as
arrivals and overnight stays) as well as monetary data (such as expenditure, revenue as well
as expenditure relating to international tourism).
In Israel, in spite of its economic significance, governments do not sufficiently recognise the
tourism. For this reason, the OECD has developed the OECD Guidelines for the Tourism
Satellite Account as well as an Employment Modules. The main aim of these combined
statistical tools is to measure the economic aspects of tourism (revenue, value added, jobs,
profit, investment,) in order to bring a more substantial demonstration of this activity's
economic importance.
In Israel, the tourism not unlike the other industries develops with the growth in the spending
of the people. The more the people spend, the more the industry grows. The spending power
of the people has been growing in the Israel as well as all over the world. Since country is
focusing on the international tourists, the large growth in the spending power in developed
countries has left the great amount of idle cash in hands. This leads to a tourism flourishing in
the world over and Israel has been no exception.
There are many people coming into this country with more cash than ever before. This leads
to rise in the demand for better hotels as well as resorts. Tourists, who previously come to the
country on a small budget and demanded for the cheap accommodation, can now afford the
luxury hotels. This is helpful to increase in the number of hotels and resorts in Israel. A
growth in spending does not only limit to the accommodation. The growth in the spending is
also evident in the rise in the number of people traveling through air. Even the number of the
domestic tourists traveling through air has dramatically risen up.
3.5 SOCIAL FACTORS
Social factors include demographics as well as culture aspects of the society. Changes in
social trends can also impact on the demand for the tourism services as well as the
willingness and availability of individuals to work. The several factors that also affect the
48
tourism are age distribution, income distribution, labour mobility, labour type and changes in
lifestyle.
The effect of culture on tourism industry observes the growing relationship between tourism
and culture, and their combination become key drivers of destination attractiveness and
competitiveness. Based on recent study of world tourism organisation, it shows the various
aspects of the relationship between culture, regional and tourism and policy interventions that
can also be taken to enhance the relationship.
3.6 TECHNOLOGICAL FACTORS
Tourism Technology, primarily based on the concept of cultural technology, is the more
broad term covering the knowledge used to improve the value of tourism products and
services on a micro-level as well as the management of the tourism industry on a macro-level.
New tourism products and services are the end result of tourism technology joining with the
other industries. These include educational tourism, medical tourism, marine tourism,
agriculture tourism as well as the application of IT to the travel and tourism industry.
Though technology does not look to be a major influence at the first glance, it plays a main
part in a promotion of a place. Better communication facilities for the tourists, are one of the
major prerequisites for the growth in the inflow of tourists. This all are possible with the help
of technology. Enhanced technology in communication fields at a cheaper cost has resulted in
various inaccessible and remote areas of the Israel getting linked to the rest of the world. This
better connectivity has made these places noticeable to the world. Good communication
means access to the media. And it is very essential if any place of the country wants to be on
the tourist map of the world. Similarly better transportation services have led to an increase in
the number of visitors visiting any particular place of the country. The presence of an airport
as well as the availability of regular flights is a great convenience to the any tourist.
The term "technology" always related to computer graphic skills, scientific achievements,
engineering related images and special effects. Tourism technology in Israel includes the
integrated fields of statistics, skills, socio-cultural and managerial know-how that the tourism
industry adapt to produce, design, and market various tourism products as well as services. In
addition to managing various aspects of HR in the tourism industry, Tourism technology
defines a broad field containing but not limited to widely refer to subjects such as contents
technology creative technology, and entertainment technology.
49
Tourists have access to internet, through a mobile, computer and tablet to access a web where
they define their wants and preferences such as their gastronomic, cultural, and artistic
preferences, their favourite hours and lifestyle, and the spending capacity.
3.7 ENVIRONMENTAL FACTORS
In Israel, the quality of the environment (both natural as well as man-made), is important to
the tourism. However, the relationship of tourism with the environment is very complex. It
includes several activities that can have negative environmental effects. Many of these effects
are connected with the construction of infrastructure such as airport and roads, as well as
tourism facilities, including shops, hotels, resorts, marinas, restaurants and golf courses. The
adverse impacts of tourism can slowly destroy the environmental resources on which industry
depends.
On the other side, Israeli tourism is also creating beneficial effects to the environment by
contributing to the environmental conservation and protection. It is a way to increase an
awareness of environmental benefits and values as well as it can also serve as a tool for
finance protection of the natural areas and raise their economic importance. This includes,
Three main impact areas: pollution, physical impacts and natural resources
How tourism can contribute to the environmental conservation and protection
Other industry impacts on tourism
Environmental impacts at the global level
3.8 RESOURCES FOR TOURISM

Resources for Tourism have three major characteristics of tourism resources; resources are
usually taken to refer to the tangible objects. Resources are not used solely by visitors and
traveller resources are perishable.
Planning for Tourism Resources Tourism brought economic benefits of employment, income
and development. Economic imperative overlooked the environmental cultural and social
consequences. Tourism planning developed from an inflexible, physical planning approach to
the flexible process which minimize the costs of tourism and maximize the benefits.
Tourism resources include physical features such as mountains, slopping hill lands, elevated
plateaus and lowland plains and cultural features such as festivals, music language, art,
folklore, food, handicrafts and the way of life of different people.
50
Visitor exports
The Tourism Ministry of Israel reported that around 3.5 million visitors came in 2012. This is
a 4.0% increase over 2011.
In Israel, the USA provided the largest number of the tourists: 610,000, around 18% of all
incoming tourism. Next was Russia with 590,000. The major difference between the two
groups is that, the number of Americans fell 4.0% from 2011, whereas the number of Russian
tourists raised 20%.
Around 70% of travellers arrived by the air, and another 235,000 by the sea. Around 18% of
the tourists, some 625,000 people visited Israel for only one day.
In Israel, visitor exports are the main component of the direct contribution of Travel and
Tourism. In 2011, Israel generated around ILS20.0bn in visitor exports. In 2012, this is
increased by 2.6%, and this country is expected to attract around 2,830,000 international
traveller arrivals.
In India, Visitor exports are the major component of the direct contribution of Travel and
Tourism. In 2011, India generated around INR801.4bn in visitor exports. In 2012, this is
increased by 3.5%, and the country is expected to attract about 6,504,000 international tourist
arrivals.
3.9 INVESTMENT IN TRAVEL & TOURISM
In Israel, Travel and Tourism was attracted the capital investment of around ILS7.9bn in
2011. This was increased by 4.1% in 2012, and it will rise by 6.0% pa over the next 10 years
to ILS14.8bn in 2022.
In Travel and Tourism, share of the total national investment will rise from 4.90% in 2012 to
6.0% in 2022.
In India, Travel & Tourism was attracted capital investment of around INR1, 253.9bn in
2011. This was increased by 12.3% in 2012, and it will rise by 7.5% pa over the next 10 years
to INR2, 903.9bn in 2022.
In Travel and Tourism, share of the total national investment will drop from 5.30% in 2012 to
4.40% in 2022.
51
Tour operator
Tour operator is the special firm which is specialize in providing the entire holiday package,
including travel as well as accommodation needs for the consumer. They ranges from the
highly specific operations such as Israelvisit.com, who customize all kind of trips that clients
can dream of, to the large operators offering products and services at all the different levels to
cater for family, budget, singles holidays to near or faraway destinations.
Concept tourism is one of the exciting options that many tour operators like
Israeliholiday.com believe is worth to taking interest in. These operators give customers a
number of exciting choices categorized according to their interest as well as concept to tour
Israel.
Israel, the land of geographical diversities offers numerous tourist destinations that are not
just de-stress but rejuvenate tourists. There are many ways to enjoy the nature in most pristine
way. There are many series of eco tours for Israel that deliver the coolest hangouts to take
desire in indulging oneself into God gifted environments.
A tour operator is also responsible to take care of all the essential activities in organizing
tours so that the overall trips of the customer goes smooth as well as pleasant from the
beginning to the end. A tour operator sometime travels to the trip locations for experience the
potential of the services and offered and also assesses the potential. Below mentioned are
some of the services of a tour operator,
Services provided by tour operator
Online Passport services
Online visa services
Private tours services
Overseas TravelInsurances
Online Hotel booking
Foreign exchange services
Corporate Travel Management
Transport services
Other Special Services
52
Apart from above services some tour operators also provide special services. The following
are the services provide by some tour operator.
MICE:
In Israel, many tour operators develop a world-class cell for the international conferences as
well as conventions. They also cater for all aspects of the business meetings, conference
organising, seminars, event Management, incentives, exhibitions and product launches. Every
event is created to suit the specific requirements of the client and every detail is handled with
the care, right from pre-event preparations, during the event and through to the post-event
settlements. Extensive planning as well as considerable research confirm the most
comprehensive and memorable conference for all the clients.
Private Car Tours:
Another way to see the country like Israel is with the private, escorted tour. This includes
travel with customers own private driver and guide in the luxury vehicle with the comfort of
customers own pace. Guides of the company are experienced and government licensed.
This tour is mainly designed by professional staff of the company according to client needs
and wants. This is the most pleasant way to travel as well as get a in-depth understanding of
the places that client want to visit.
VIP services:
These services include passport service as well as transportation to and from the airplane, 90
minutes stay including hot and cold drinks as well as office service, all of the flight procedure
(such as passport control, security check, flight check-in etc.) are done while guests are
relaxing in the lounge, with the air-conditioner tourist car etc.
Guaranteed escorted tours:
Guaranteed escorted tours are the most popular product, which give guarantee of weekly
departures and they are conducted by the highly experienced and licensed tour guides who
are able to handle every part of the trip - from the beginning to the end.
In general, escorted tours include transportation, hotels, private transfers between airport and
hotel, sightseeing and meals. This tours range from seven to fourteen nights in the length.
53
Escorted tours are also ideal for those passengers who are looking to join a group during
tours.
Special Interest Tours:
Sometimes company offers a broad range of different programs to suit customers special
interests, whether they are geological, educational, cultural, historical, gastronomic or even
extreme sports.
Organizing a successful special interest tours requires thorough pre planning, knowledge as
well as experience. Companys highly trained and licenced team of professionals as well as
guides make sure that customers special interest tour will be engrossing, exciting, and
unforgettable.
Shore Excursions:
Company also arranges the highest quality shore excursions which are delivered by its
specialists in the lower cost for customers. As company has not a huge cruise line providing
to thousands of clients per day, these shore excursions allow customers to travel in the much
smaller groups offering an extra personalized experience. Company also provides tour guides
in many languages.
3.10 OPPURTUNITIES
Tourism is one of the largest service industries in terms of gross revenue and foreign
exchange earnings. Its role and importance in fostering economic development of a country
and creating greater employment opportunities has been well recognized worldwide. In India,
the tourism industry has the potential to grow at a high rate and ensure consequential
development of the infrastructure. It has the capacity to stimulate other economic sectors
through its backward and forward linkages and cross-sectional synergies with sectors like
agriculture, horticulture, poultry, handicrafts, transport, construction etc.
India and Israel have signed a memorandum of understanding (MoU) to boost their bilateral
ties in the tourism sector, with Israel opening a tourism office in Mumbai and increasing the
number of El Al flights to India. This agreement aims to increase tourism to and from Israel.
54
Israel has a plan of developing business based tourism opportunities like MICE, agro tourism
adventure tourism, dive tourism etc. Tour operators in India have started offering variety of
packages supporting leisure, agro, adventure and eco-tourism to Israel.
With over 40,000 Indian visitors coming to Israel per year, and equal number of Israeli
citizens travelling to India, Indian tourists spent some NIS 160 million last year during their
stay in Israel. Half of the visitors were pilgrims, while the rest came for a vacation. So both
countries have an to expand the tourism market. To double the number of tourists, Israel will
construct 200,000 new hotel rooms as well as increase the number of El Al flights, the Israeli
air carrier, from three times a week to one per day.
Close analysis of the growth in travel and tourism market reveals the evolution of India's
tourism sector, which has thrown open opportunities for not just the big corporate houses but
small and medium enterprises and entrepreneurs.
Tourism services and product of Israel is so varied that very few countries in the world can
provide such a mix of nature, richness of architecture, wildlife, festivities, shopping etc. in
one holiday. Thus Indian holidays provide real tourist experience. The Travellers of all ages,
all budgets and all interest can find their visit very satisfying.
A high priority sector for the Indian Government, various steps have been undertaken to
increase foreign tourist arrivals from Israel and expand the sector. What makes this sector
really exciting for investors is the variety of tourist requirements, spread across domestic and
foreign.
55
CHAPTER 4
Diamond Industry of Israel
56
4.1 INTRODUCTION
India is the world's major cutting plus polishing centre of diamonds; the cutting and polishing
business is well supported by government policies as well as the banking sector with around 50 banks
providing nearly USD 3 billion of credit towards the Indian diamond industry. It is considered to be
diamonds polishing as well as processing capital of the world as its artisans are skilled in handing out
small-sized diamonds.
Currently, India exports 95% of the worlds diamonds, according to information released
through the Gems and Jewellery Export promotion Council. A chief portion of the rough,
uncut diamonds processed into India is exported, either in the shape of polished diamonds
otherwise finished diamond jewellery.
The size of the Indian gems as well as Jewellery market was USD 30.1 billion in 2011 and is
predicted to be USD 45 billion by 2015 due to growing domestic demand. The country is one
of the major exporters of gems and jewellery plus the diamond industry is considered to play
a very important role in the Indian financial system as it is an important foreign exchange
earner.
The Diamond segment is expected to produce up to USD 35 billion of returns from exports
by the year 2015. The countries where demand is growing for Indian jewellery include the
UAE, the USA, Russia, Singapor, Hong Kong, Latin America as well as China.
This sector provides service to around 1.8 million people. In the coming five years, it is
predicted that this sector will create extra employment for around 1.1 million citizens. FDI
into the diamond as well as gold ornaments segment was US$ 302 million from April 2000 to
April 2011, as per information released through the Department of Industrial Policy and
Promotion, which is division of the Ministry of Commerce and Industry, as well as is charged
through the framing of the countrys FDI policy.
The center of India's jewellery business is Mumbai that receives the greater part of the
country's gold as well as rough diamond imports. Mumbai has a significant number of
modern, semi-automatic factories as well as laser-cutting units, the majority of which are
situated into the special economic zone. The greater part of the diamond processing, though,
is undertaken within Gujarat, (principally in Surat, Bhavnagar, Ahmadabad as well as Bhuj)
plus in Rajasthan (Jaipur).
57
4.2 DIAMOND INDUSTRY OF ISRAEL

Since the fifteenth century, while an Antwerp Jewish diamond harvester Lodewyk van
Berken made-up the scaif, diamond cutting was one of traditional Jewish craft. The Israeli
diamond business began in 1937, earlier than the Declaration of the founding of the State of
Israel, when the primary diamond polishing plant was started in Petah Tikva by immigrant
experts from Holland.
In 1938 the 15% import duty lying on imported rough gravel was detached. By 1944 the
manufacturing employed 3,300 employees in 33 factories, through P.1, 320,000 capital
investment, completely Jewish. The price of exports was over P.3, 200,000 mostly to the
USA, Canada as well as India.
Polished diamonds became one of the Israels most important export items. Nowadays Israel
is one of the worlds major exporters of cultured diamonds, as well as also a major center for
the business in rough diamonds too. About one third of worldwide rough diamond
manufacture is imported to the Israel Diamond Exchange every year from where it finds its
method to the world markets.
Israel has also extended its industrialized capabilities to a variety of offshore locations in
India, China, and Africa as well as elsewhere. The bulk of diamonds processed out of the
country are smaller stones. They are imported back to Israel for grading as well as sorting,
and are finally exported by the Israeli companies toward markets in North America, Asia,
Europe as well as elsewhere.
Israel is the leading polished diamond provider to the US market, which is measured largest
diamond expenditure market in the world. Around half of diamonds purchased in the US in
dollar terms are from Israel. With the speedy growth of Asian markets the majority notably
China, Hong Kong, as well as India- Israel is speedily becoming the most important factor in
supplying these markets too.
4.3 COMPANIES OF DIAMOND INDUSTRY
ISRAELI COMPANIES
Leo Schechter Diamonds Ltd.
According to the yearly catalog of Israels top 25 diamond exports published through the
Ministry of commerce, Trade and Labor, Leo Schechters exports improved by 12 percent
58
year on year to $403 million throughout 2011. The corporation had ranked in second position
for the past few years.
Asherov Diamonds
Asherov Diamonds Israel (Since 1975), is a well recognized diamond company within Israel,
USA, Hong Kong as well as China. Asherov Diamonds holding official document of
Eligibility by the WFDB mark that verifies that who is diamond bourse member in a good
quality standing as well as who have pledged to support the standards of the Word Federation
Code of Principles has been accepted through the Word Federation Bourses.
Rosy Blue
Rosy Blue is one of the worlds leading diamantaires, with a long and illustrious history of
excellence in the diamond business. Rosy Blue is a international leader in the producer of
high-class polished diamonds as well as finished jewellery.
Seren diamond
Seren Diamond is absolutely a vital source of uncommon Fancy Color diamonds. The
company offers a extensive range of exclusive Natural imagine Color diamonds in exclusive
shades such as yellow, pink as well as blue; Its exclusive collection of red plus green
diamonds that are the majority rare as well as expensive, particularly those that are pure
insignia similar to Fancy Vivid (Intense) Green, Fancy (Purplish) Red, are of fastidious
interest. These diamonds have forever been required by the majority avid diamond collectors
despite their tremendously high price (for instance, the price of a 1.00 ct. red diamond can
come to more than $1 mln. for each carat) as well as are measured to be an outstanding
investment.
INDIAN COMPANIES
Gitanjali Group
Founded as a particular company for cutting as well as polishing diamonds intended for the
jewellery trade at Surat, Gujarat, during 1966, the Gitanjali Group became, numerous times
over, a pioneer among main diamond as well as jewellery houses. First most important
diamond as well as jewellery house to be launched plus run by contemporary entrepreneurs
rather than dynastic jewelers.
59
Goenka Diamond & Jewels Ltd

Goenka Diamond & Jewels Ltd is in the industry of cutting as well as polishing of diamonds
plus manufacturing as well as retailing of diamond jewellery. The corporation supplies the
polished diamonds mainly to wholesalers, jewellery manufacturers, traders as well as retailers
based out India plus other countries such as Hong Kong, South East Asia as well as USA.
C.Mahendra Exports Ltd.
C.Mahendra Exports Ltd., a famous plus trusted name since 1974, is one of the most
important diamantaire plus Jewelry Company with a wide extends around the world. The
pioneers of the corporation, Mr. Mahendra Shah as well as Mr. Champak Mehta incorporated
the company from the scratch in 1974. The flagship corporation of our CM Group,
C.Mahendra Exports was created in the year 1978 to obtain on the business of manufacturing
as well as trading of diamonds.
Lypsa gems and jewellery
Since their commencement in 1998, they have for all time tried to embrace their heritage and
family principles into their company's culture. With an international scope and keeping in
mind their customers' necessities, their stone by stone focal point on quality and customer
concern has made Lypsa the #1 diamond traders. With an inspired willpower, innovation, as
well as accuracy in everything they try to influence sparkling excellence in each surface of
their business lacking compromising the future at the price of tradition.
4.4 FINANCIAL COMPAIRISION OF COMPANIES
Gitanjali Gems Vs Leo Schachter Diamonds Ltd.
The current ratio of Gitanjali Gems is good as compared to Leo Schachter Diamonds
Ltd. This is the indication of a firm's market liquidity and ability to meet creditor's
demands. Generally it is between 1.5 and 3 for healthy businesses. Gitanjali Gems
current ratio is in this range which indicates good short-term financial strength. If
current liabilities exceed current assets (i.e. the current ratio is below 1) like in case of
Leo Schachter Diamonds Ltd.
so it may have problems meeting its short-term
obligations.
60
The debt-equity ratio of Leo Schachter Diamonds Ltd. is more than Gitanjali
Gemsand ratio is greater than one which means assets are mainly financed with debt
in Leo. In Gitanjali Gems equity provides a majority of the financing. If the ratio is
high (financed more with debt) then the company is in a risky position, especially if
interest rates are on the rise.
The equity/ asset ratio indicates the relationship of the total assets of the firm to the
part owned by shareholders. Here the equity/ asset ratio of Leo Schachter Diamonds
Ltd. Is good as compare to Gitanjali Gems means indicate the Leo has taken on
substantial debt merely to remain its business.
Goenka Diamond Vs Rosy Blue
Here the current ratio of Goenka Diamond and Rosy Blue is good (more then 1.5). This is the
indication of a firm's market liquidity and ability to meet creditor's demands.
Here the debt-equity ratio of Rosy Blue is more than Goenka Diamond and it means
assets are mainly financed with debt in Rosy Blue. InGoenka Diamondequity provides
a majority of the financing .If the ratio is high (financed more with debt) then the
company is in a risky position, especially if interest rates are on the rise.
part owned by shareholders. Here the equity/ asset ratio of Rosy Blue Is good as
compare to Goenka Diamond means indicate the Rosy Blue has taken on substantial
debt merely to remain its business.
C. Mahendra Exports Vs Asherov Diamonds
Here the current ratio C. Mahendra Exports and Asherov Diamondsis good (more then 1.5).
So this is the indication of a firm's market liquidity and ability to meet creditor's demands.
Here the debt-equity ratio of C. Mahendra Exports is more than Asherov Diamonds
and ratio greater means assets are mainly financed with debt in C. Mahendra. In
Asherov Diamonds equity provides a majority of the financing .If the ratio is high
(financed more with debt) then the company is in a risky position, especially if
interest rates are on the rise.
61
part owned by shareholders. Here the equity/ asset ratio of Asherov Diamonds Is good
as compare to C. Mahendra Exports means indicate the Asherov Diamonds has taken
on substantial debt merely to remain its business.
Lypsa Gems and Jewellery Vs Seren Diamond Ltd.
Here the current ratio Lypsa Gems and Jewellery is more than Seren Diamond Ltd. So
this is the indication of a firm's market liquidity and ability to meet creditor's
demands. Generally between 1.5 and 3 for healthy businesses. Lypsa Gems current
ratio is in this range, and then it generally indicates good short-term financial strength.
If current liabilities exceed current assets (the current ratio is below 1), so the Seren
Diamond Ltd. may have problems meeting its short-term obligations.
Here the debt-equity ratio of Seren Diamond Ltd. Is high as compare to Lypsa Gems
and Jewellery and ratio greater means assets are mainly financed with debt in Seren
Diamond. In Lypsa Gems and Jewelleryequity provides a majority of the financing .If
the ratio is high (financed more with debt) then the company is in a risky position,
especially if interest rates are on the rise.
part owned by shareholders. Here the equity/ asset ratio of Seren Diamond Ltd. Is
good as compare to Lypsa Gems and Jewellerymeans the Seren Diamond Ltd. has
taken on substantial debt merely to remain its business.
62
India-Israel
two-sided
Trade
in
2007-2011
(in
US$
Millions)
IsraelIndia two-sided Trade in Diamonds (Gross Numbers)

In millions of US$
Israels Import from
2006
2007
2008
2009
2010
2011
947.5
1131.8
975.2
639.2
1132
1356.1
792.2
888.6
983.4
612.4
1211
1555.0
1739.7
2020.4
1958.6
1251.6
2343
2911.1
India
Israels Export
to
India
Total bilateral trade
in diamonds
Source: Central Bureau of Statistics
TABLE 4.1
4.5 WTO-GENERAL TRADE IMPLICATION FOR THE INDUSTRY
As predetermined in the 2001 Interim Poverty Reduction Strategy Paper (IPRSP), the sectoral
purpose is to advance the wellbeing of the recurring mining population as well as make
63
activities more open plus transparent. The 1996 Mines & natural resources Act provides the
legal framework for this segment.
Mining rights as well as exploration license are decided on a first-come first-served base.
According to the system, the main objectives of the center Mineral Policy (CMP) (November
2003) are to:
(i) review plus amend the laws and regulations leading the mining and
marketing of minerals; (ii) make stronger the institutions that manage, regulate, and monitor
the mining segment; (iii) develop and reinforce human resources; (iv) attract confidential
investment; (v) ensure that Sierra Leone's sandstone wealth supports national financial and
social development; (vi) improve the guideline and efficiency of artisanal as well as smallscale mines; (vii) minimize as well as mitigate the adverse collision of mining operations on
physical condition, communities, and the surroundings; (viii) promote enhanced employment
practices; and (ix) add value to removal products and make easy trading opportunities.
Aspects for Indian diamond business
Cheap Labor cost
Political stability
Huge market availability
War condition in Israel
India is only center which offers an incredible variety of gems as well as plain,
diamond-studded & colored-stone-studded jewels suited for every need of all market
within the world.
Barriers for Israel diamond business
Costlier Labor cost.
Israel has lost its shining because other country has come up with huge market
availability.
War condition.
4.6 DIAMOND TECHNOLOGY
Israel
The Israel Diamond Institute Group of corporation channels a sizable portion of its capital
into R&D, investing substantial funds as well as efforts into promoting innovative diamond
manufacturing technologies. The latter promise to decrease production costs, improve yield
plus make, enlarge output, and enable manufacture of a larger diversity of goods.
64
The Israel Diamond Technology Center (I.D.T.) a fully-owned supplementary of the

Institute is accountable for centralizing as well as supervising all stages of R&D
development planning and implementation.
India
The Indian gems plus jewellery industry has approach a long way from the traditional manual
cutting as well as polishing to adopting hi-tech plus effective software, much to the
resentment of its counterpart in China, Belgium, Hong Kong as well as Italy.
The last few years have seen an appearance of the tech-savvy diamond business, always
ready to adopt innovative technologies in order to decrease dependence of skilled employees
who are in short supply plus increase manufacturing costs.
The diamond manufacturing has it all a software that maps inclusions plus flaws in the
diamonds, tools that generate cutting solutions through estimated yields, green lasers that
doesn't depart pronounced burn marks on top of the diamonds, hi-tech diamond calculator
used for gauging the light, luster plus fire of the stones as well as fully automatic polishing
machines.
Surat is principally recognized as the diamond center of the world. It is at the heart of the
world's diamond-polishing business, which during 2005 cut 92% of the world's diamond
pieces plus earned India $15 billion into exports. Gujarati diamond cutters, emigrate from
East Africa, established the business in 1901 and, by the 1970s; Surat-based diamond cutters
begin exporting stones to the US designed for the first time.
4.7 REQUIREMENTS OF RESOURCES AND AVAILABILITY
Israel does not have any diamond mines but they import the rough diamond to their country
and then cutting and polishing done by experienced labours. Then they export those polished
diamond to the world diamond market. USA is main consumer of Israeli polished diamond.
Most of the rough diamonds are come from African countries to Israel for polishing.
Israel have very advanced technology for the cutting and polishing of the rough diamond so
because of that they are the leader in this business in last three decades. In India 100% FDI is
permitted in the gems and jewellery sector through the automatic route.
65
But now this diamond industry moves from Israel to India. There are many reasons
responsible for this movement of diamond industry. Like,
Cheaper Labor cost
Political stability
Huge market availability
War condition in Israel
India is only center which offers a truly incredible variety of gems as well as plain,
diamond-studded & colored-stone-studded jewelry suited for all need of every market
in the world.
4.8 OPPURTUNITIES
Traditionally, the diamond polishing business has followed the track of low labor
costs. New York was a main diamond manufacturing center once. Lower wage bills in
Europe brought the manufacturing business to Belgium, after that to Israel and now to
India as well as China.
The availability of low-cost labor is one of the most important factors behind India's
achievement. "India spends US$10 per carat on the polishing as well as cutting of
diamonds, alongside China's US$17 plus South Africa's US$40 to US$60.
India Has . . .
Cheaper Labor cost.
Political stability.
Huge market availability.
India is only center which offers a truly incredible variety of gems as well as plain,
diamond-studded & colored-stone-studded jewelry suited for all need of every market
in the world.
The entrepreneurial strength in the Gujarati community in India.
Israel Has . . .
Traditional diamond-cutting knowledge
A worldwide chief in the development plus manufacture of advanced planning,

evaluation plus measurement systems for diamond plus gemstone production.
The support of the financial system in Israel.

66
CHAPTER 5
Chemical Industry of Israel
67
5.1 INTRODUCTION
Israels chemical industry begin formally at the launch of the last century, when efforts were
prepared to extract potash and later on bromine from the Dead Sea.
Israels chemical industry has played a major task in the countrys financial development and
has in a little areas establish Israel among the world's leading chemical-producing nations.
The industry can be divided into some subsectors: mineral deposits and fertilizers; bromine,
refined oils and petrochemicals. Israels chemical Industry employs over 30,000 workers.
Israels chemical industry begins formally at the establishment of the final century, when
hard work was made to take out potash and later bromine as of the Dead Sea. By 1946, the
manufacture of potash fertilizers had begin in Haifa and with the concern of the State, the
new government shaped more than a few state-owned companies to mine raw materials and
progression their derivatives. In 1952, the Dead Sea Works was founded, followed in 1955 by
the Dead Sea Bromine Company.
5.2 MAJOR COMPANIES AND THEIR PRODUCTS
1. ISRAEL CHEMICAL LIMITED
ICL is one of the worlds foremost fertilizer and sphere chemical companies. With
restricted concession to dig out elevated quality, cheap minerals from Israels Dead Sea
and rights to mine the Negev Desert, ICL is a key manufacturer of potash, compound
potash and phosphate fertilizers, food grade phosphoric acid, elemental bromine,
magnesium and a key player in sphere chemical lofty margin niche markets.
Fertilizers Products
Potash
Phosphate rock
Phosphoric acid
PK fertilizers
Liquid and fully soluble fertilizers
68
2. ALON OIL LIMITED

Alon in progress off as a young and dynamic petroleum company, starting its first filling
station in Israel in 1993. Today Alon is a multi-billion holding company operating in the
energy and retail sectors under leading brand names in Israel and the U.S. Alon in Hebrew
means oak tree
Major products
Speedomat
Diesel Refueling Centers Card
Speedomat Device
Fuel Supply
Speedomat Card
Lubricants
Diesel Refueling Center
3. PAZ OIL COMPANY

The Paz Group is Israel's foremost power corporation and during its 90 years has become one
of the economy's most well-known brands. Paz produces a third of Israel's fuel products and
is the country's first energy company to own a refinery.
Major products
Pazgas
Paz Lubricants and Chemicals
Pazkar
4. TAMBOUR PAINTS LTDTambour, Israels foremost paint manufacturing and marketing company, is a contemporary
company specializing in the production and marketing of quality decorative and industrial
paints, extraordinary application paints for aircraft, railroads and ships, advanced
construction material, emulsions for the paint industry, paper and cardboard, adhesives for
69
construction and wood, printing ink, automobile paints, floor paints, powder coatings, road
marking paints, gypsum, sealants and more.
Products and Services:
Calcomox and White Tambour fill
Fantasy- faux finishes
Gluee putty 2000
Antique
Bounderol super
Metal Fantasy
Tamgar
Suede
Tambour Effects Products
Super wash
5.3 PRESENT TRADE

India-Israel trade in 2011 increased by 8.8% from US$ 4.736 billion in 2010 to US$ 5.153 in
2011. Balance of trade in 2011 was in Israels favor by US$ 844 million. In 2011, India was
Israels 8th main trade partner and Israels third main trade partner in Asia after China and Hong
Kong (trade data includes diamonds). In 2011, India was ranked 11th major import basis of Israel
including diamonds, and 16th largest import source excluding diamonds.
Major exports from Indiato Israel
Major exports from Israel to India
Investment
Agreements signed between the two countries:
5.4 WTO TRADE IMPLICATION FOR SELECTED INDUSRTY
TRIPs: Trade Related Aspects of Intellectual Property Rights
More than counterfeiting
The chemical industrys contribution to the so-called White Paper on IP developed by

UNICE, Keidanren, USIPC (1990, first draft proposal 1991)
Strong language on patents: scope no discrimination: all inventions in all fields of

technology; patent rights international exhaustion; compulsory licensing.
Excursus:
70
Access to Medicines: Lacunae in TRIPs Political Compromise which weakens

TRIPs? Will it work in practice?
TBT and SPS
Control of protectionism imposed in the guise of technical regulations
Key article: Article 2.2 TBT proportionality requirement for domestic legislation
Key article: Article 2.2 SPS based on scientific principles and not maintained
without sufficient scientific evidence
Excursus: Philosophy of the Agreements:
Scientific Evidence required by the Hormones case
Safeguards
5.5 LEGAL ASPECTS/ BARRIERS APPLICABLE TO THE INDUSTRY

In India
High prices of basic feed stock
SSI reservation / Fragmented nature of industry
Low R&D levels
Low Level of ICT interface
Low Level of Brand Development
Low Level of Common Infrastructure
Dumping / Import Competition
Environmental Regulations
In Israel
The Israeli Chemicals Industry
Existing Regulatory and Legal framework
The Licensing of Businesses Law (1968)
The Hazardous Substances Law (1993)
The Pharmaceutical Ordinance (1981)
Information and Response Center for Hazardous Substances

i. Risk to Public Health.
ii. Risk in Workplace.
iii. Risk in Transport
71
5.6 PRESENT TRADE POLICY IN TERMS OF IMPORT-EXPORT

Israel's trade policy objectives are as follows:
(1) Continued integration of the Israeli economy into the global trading system, through the
use of policy instruments that relate to trade in goods, services, investment, competition,
environment, intellectual property, and others.
(2) Promote and maintain Israel's exports competitiveness by expanding and updating the
network of international agreements designed to promote trade, facilitate market access,
eliminate non-tariff barriers and encourage long term economic growth.
(3) Increase the efficiency of resource allocation, by enhancing reforms that aim at the
introduction of greater competition and increased transparency in the domestic market.
(4) Create an attractive climate for investors, businesspeople, and consumers.
5.7 TECHNOLOGICAL ADVANCEMENT IN THE INDUSTRY
LIST Kneader Reactor Technology
Bioprocesses And Biotechnology
Wastewater Treatment
Membrane Technology
New Technology Surges in the Chemical Industries
5.8 PREVALING INVESTMENT PATTERN IN ISRAEL

The major sources of investment in the Israel are:
Venture Capital Investment
Joint Venture
MERGERS AND ACQUISTIONS
In India
In Israel
Alpha Drug India Ltd. Amalgamation

with
Punjab
Chemicals
&
Crop
72
Potashs
merger
Chemicals.
deal
with
Israel
Protection Ltd.
United Phosphorus acquired 50% stake

in Spicam Isagro Brasil.
5.9 REQUIREMENT OF RESOURCES FOR THE INDUSTRIAL OPERATIONS AND

AVAILABILITY
Market
Resources
Location
Waste disposal
Viability
Electricity
Finance requirement
Physical facility
73
5.10 OVERALL COMPARISON OF INDIA AND ISRAEL

SR
no.
Particular
Major companies
India
Israel
1. IFFCO,
1. Israel chemical
2. ONGC
limited
3. IOCL
2. Alon
4. Asian paints ltd
oil
limited
3. Paz
oil
company
4. Tambour paint
limited
2
Major products
Urea,
NPK
,Bio
petroleum,
decorative
fertilizers, Potash,
natural
paints,
paints, ancillaries
gas, acid,
phosphoric
PK fertilizers,
industrial elemental
bromine,
magnesia
gas,
lubricants
and
chemical, paints for

construction, printing
inks, and automotive
paints.
3
Present trade
2154.5 us $ million
2998.5 us$ million
Applicable
Applicable
Export- import
4
WTO Trade implication
Legal
aspects
barriers Relatively high
applicable to industry
Relatively
less
but
more conscious with

regard to environment
Present trade in terms of 36 %
36 %
import export
% of chemical products in
total export imports
74
Technological advancement
Currently same
Currently
very
same
aggressive
but
in
terms of research and

innovations
8
Prevailing investment pattern
Joint Venture
Venture
capital
investment
Joint venture
9
1. Alfa drug India ltd with 1.potash
Mergers & acquisitions
merger
Punjab chemical & crop with Israel chemical

protection ;td
ltd.
2. United phosphorus with

spicam isagro brasil.
TABLE 5.1
COMPARISONS OF INDIAN AND ISRAELI CHEMICAL COMPANIES

Sr.
Parameter
Israel
IFF
Tambou
No
chemica
CO
r paints paint
l limited
limited
Asian
Alon oil ONGC
Paz Oil IOCL
limited
Ltd.
Ltd.
s
limite
d
General
Comparison
1
Date
of 1968
1967 1962
1954
1941
1956
1934
1972
Co-
Private
Privat
Private
Public
Corporat
Corporati
oper
company
compan
ion
on
comp
Bat yam
Mumbai
Incorporation
2
Type
Of Public
Company
ative
any
3
Headquarter/
Tel-
New
Jerusale
Mum
Jerusale
New
Registered
Aviv
Delh
bai
Delhi
75
Office
4
Country
Israel
Indi
Israel
India
Israel
India
Israel
India
Paints
Paints
Petroleu
Oil
Gas
Petrol
Fenna
Govern
Zadik
R.K.Malh
a
5
Type
OF Chemica
Business/Bus
ls
iness
Ferti
lizer
& Petroleu
Oil
&
Activities
6
Promoters
Stefan
Nat
Peter.
R.K.L
Borgas
warl
A.lovell
axma
ment of Bino
India
al
otra
patel
7
Current Share 72000
425
Price
Rs.
Rs.
Stock
Tel-
BSE
8880 Rs.
Tel-Aviv
4871.
51960
314.65
844350
310.85
70 Rs.
Rs.
Rs.
Rs
Rs.
BSE
Tel-
NSE
Tel-
NSE
Exchange (on Aviv
stock
Aviv
Aviv
which it is stock
exchange
stock
stock
exchang
exchang
exchang
listed)
Financial
(Figure in Crore)
Comparison
1
Annual
19178.6
Turnover
2
PBIT
Net
4386.2
Profit 3753.96
(PAT)
4
Total Assets
Total
22267
12495
Liabilities
2559 1496
8105.
8.97
65
1017 98
1362.
.18
93
772.
70
958.3
18
1829 672
4389.
47
127
441
86.0
2492.
5308.8
18683
11487
434508
39.2
4941.8
128.8
3754.31
21
2690.5
96.6
3954.62
2471
24550.
10095.4
73554.10
7623
151983.0
25
2093
25
27250.
2
8
6
Debt
6958
262. 161
202.1
76
763
1125.2
4575.2
22659.63
Equity
9577.4
49
425. 238
95.92
378
28360
2472.4
2427.75
2.10
2.01
.03
4.04
9.33
1442
1587
3963
13415.36
1344
1348
3046.4
129323.4
80
8
Debt-Equity
0.73
0.62
0.68
9515.8
1339 408.8
2777.
9.13
59
1252 284.2
2290.
Liabilities
3.59
08
Current Ratio
1.07
Ratio
9
Current
Assets
10
11
Current
5531
1.44
1.22
2
1.07
1.15
1.30
.10
1.72
TABLE 5.2
5.11 BARRIERS FOR INDIAN COMPANIES
Entry Barriers
From the study of the entire chemical industry of Israel, one can say that there is a very less
available for the Indian chemical companies rather one can say that it is infeasible for the Indian
companies to go and start the operations in the Israel. The major supporting facts which can
strengthen the argument of infeasibility of the Indian chemical companies in Israel are as
follows.
Political factors
In any country a political factors are the most important factors to look after because it may
create huge impacts on our business.The political ground has an enormous pressure upon the
regulation of businesses, and the spending power of consumers and other businesses. The major
political factors of the Israel are as follows:
The politics of Israel is dominated by Zionist parties. They traditionally fall into three camps, the
first two being the largest: Labor Zionism (social democrat), Revisionist Zionism (conservative)
and Religious Zionism.
77
Along with all these political factors major factor which Indian companies need to take into
consideration is war environment which may arise any time.
Israeli-Palestinian conflict
Arab-Israeli conflict
Economical factors
The economy of Israel is a technologically superior market economy, including speedily

developing high-tech, agricultural, financial and service sectors. As of 2011, Israel ranks
17th among 187 world nations on the UN's Human Development Index, which places it
in the category of "Very Highly Developed".
Though relatively poor in natural resources, Israels dependence on imports of chemical

has reduced due to recent discoveries of large natural gas reserves off its coast.
Israel is facing challenges of high dependency of the growing number of Ultra-Orthodox

Jews who have a low level of official labor force participation amongst men, which may
deteriorate the availability of the quality labor to the chemical industry.
Social factors
The social and cultural influences on industry differ from country to country. It is very important
that such factors are considered. Before going to the Israel for the development of the business
Indian chemical companies need to understand various socio cultural barriers which might
hinder the development of the chemical companies. Some of the dominant Israeli social factors
are as below:
Appointment Alert
Gift Giving
Technological factors
From the perceptive of the technology chemical industry is highly technology driven industry,
but if we see current technological advancements in both the countries, both countries are using
the same technology like:
78
LIST Kneader Reactor Technology
Bioprocesses and biotechnology
Wastewater Treatment
Membrane Technology
But if we see the following diagram one can say that in technological advancement Israel will be
far ahead of India so it is very hard for the Indian companies to cope with the Israels companies.
From the below diagram one can easily say that Israel is highly focusing on the innovativeness as
its stands on the second position followed by U.S.
Environmental factors:
Land area
Air pollution
Water shortages
Population density and loss of open space
Waste disposal
Species extinction
Death of the dead sea
Legal factors
There are certain legal factors which might be taken into consideration for any chemical
companies when it wants to operate in the Israel which are as follows.
The chemical regulatory regime in Israel is not mature enough and not fully developed to
this date. No well-structured policy on the general chemical regulation exists in Israel
thus far, and the matter is handled in a way patches drawn together from various areas of
regulation.
The environmental aspect of risk regulation is the leading regulatory approach.
Israels environmental legislation is wide-ranging:
The Licensing of Businesses Law (1968)
The Pharmaceutical Ordinance (1981)
The Hazardous Substances Law (1993)

79
5.12 OPPURTUNITIES
India-Israel trade in 2011 increased by 8.8% from US$ 4.736 billion in 2010 to US$
5.153 in 2011. Balance of trade in 2011 was in Israels favor by US$ 844 million.
Indian companies are marking their presence in Israel through mergers and acquisitions
and by opening branch offices. But there are not
The chemical regulatory regime in Israel is not mature enough and not fully developed to
this date. No well-structured policy on the general chemical regulation exists in Israel
thus far, and the matter is handled in a way patches drawn together from various areas of
regulation.
In total export of the Israel county, export of chemical constitute about 36 % of the total
export as well as it major imports constitute 36 % of chemical raw material from the
India.
With respect to the technological development, in both the country there are no major
difference in the advancements but it is very clear from the statistics that Israel may be
ahead of India as it currently ranks number 2 after the U.S.
The National Plan for the Chemical Industry in Israel is a large project. The project
analyzes past and present chemical and pharmaceutical activities in Israel, presents
alternatives and proposes new industry branches in this field. This project compares these
industries with other global markets and suggests policy tools for Israeli decision makers.
While Israel has not yet formally ratified the European Agreement concerning the
International Carriage of Dangerous Goods by Road (ADR) and its protocol, it has been
implementing most of the terms of the convention in practice for years.
At present, approximately 200 quarries are in operation within the country. Overall
annual production totals about 50-60 million tons of raw materials, including different
kinds of aggregates, gravel, dimensional stones, sand and other materials used mainly in
construction. Phosphate mines are found in the southern part of the country, and the
minerals extracted are used primarily in the chemical industry and agriculture sector.
Paz Oil Company limited supplies a third of Israel's fuel products and is the country's first
energy company to own a refinery which indicates that it produces a most energy which
the country can consume.
80
There had been an agreement between INDIA and ISRAEL in 1996, for promotion and
protection of investment, so that profitability wouldnt be the clash for both the countries.
There is a provision of laws on happenings of risks to public health, workplace and
transportation in order to avoid these risks.
International trade plays a vital role in the economy of the State of Israel. Indeed, in
recent years, the Israeli economy has integrated into the global trading system in a rapid
and efficient manner, by implementing multilateral and bilateral trade agreements, as
well as by pursuing a unilateral process of trade liberalization and structural reforms.
As per 2011, Israel has exported 40% of its machineries, equipments and other
technologies to India which indicates that Israel has been becoming the super power as
far as technologies are concerned.
Opportunities for Indian companies
The tenth annual Israel Investment Conference take place in London. Represented by
the PR company Grayling, the aim of the day was to sell Israel as a secure investment
and a promising emerging market worthy of attention. Only four weeks before the
conference, Israel had been accepted into the OECD (Organization for Economic Cooperation and Development) despite the efforts of campaigners to prevent this by
protesting that a country which include their illegal settlement activities and businesses in
their economic data can hardly be seen as complying with the OECD motto For a
stronger, cleaner, fairer world economy. However, since Israel had also been promoted
from emerging to developed market status by the MSCI a few days before the event,
there was always bound to be a lot of interest from investors willing to find ways to
benefit from Israels occupation economy.
Focusing on banking, energy and the biotech sector, the conference highlighted the
already cosy relationships between Israel and global international companies..The
literature handed out to attendees at the conference gave, as one of the top ten reasons for
investing in the country, that The state of Israel is committed to encouraging local and
foreign direct investment by offering a wide range of incentives and benefits, such as
investment grants, tax benefits and exemptions to investors, hence making it very clear
81
to potential investors that should they choose to get involved with any of the companies
exhibiting, they would be beneficiaries of Israels apartheid system.
82
CHAPTER 6
Communication Industry of Israel
83
6.1 INTRODUCTION
Israel Communication Industry
The Communication industry of Israel is very well developed. Though being a very small
country in terms of area and population the communication sector of Israel can challenge any
country. Israeli companies have traditionally been at the forefront of the global IT and
communications industry. Over 65 years of innovation in civilian and military applications have
resulted in the rising of a number of world-renowned Internets, information technology and
communications hub in Israel, beside with hundreds of smaller tech companies and over
thousand active Israeli communications start-ups.
Growth of the industry
In the last decade, Israel has become a leading supplier for the global telecommunications
industry. Generating cutting-edge, innovative technologies, Israeli communications companies
persist to attract top institutional investors, raising a tremendous $100 million from venture
capitalists in 2005.
In 2011, the Internet sector paying attention the largest shares of investments for the first
time in the last decade, 120 Internet companies raised $482 million or 25% of total
capital raised by high-tech companies, compared to $222 million or 18% of total capital
raised in 2010 and $147 million or 13% raised in 2009. (IVC)
The communications sector followed with $432 million (20%) an increase of 82% from
$238 million (19%) in 2010. (IVC)
Third largest was the software sector with 95 companies raising $415 million (19%)
compared to just $150 million (12%) in 2010.(IVC)
International software companies export more than $3 billion annually.
Communications exports reached $4.1 billion in 2009. (IEI)
84
In the 2011 Deloitte Technology got Fast 500 EMEA ranking, three Israeli companies
Tufin, Webs planet and Kenshoo were in the top 20 companies.
6.2 PRODUCT AND SERVICES OF THE COMMUNICATION SECTOR

Communication Equipment
Routers, Switches, Networking gear and Optical Components developed in Israel are part of
almost every network in the world - from the core of the network to the network edge and even
in the home, as part of Consumer-Premise Equipment - with veteran companies like Telrad, ECI
and RAD alongside start-ups like Ethos, Axerra, Actelis and many others.
Communication Software
Communication Software has been a core growth engine for the Israeli industry, with innovation
spill over from large companies such as Comverse and Amdocs to a multitude of smaller
companies and start-ups
Cable, IPTV and Content Delivery
With companies like Harmonic, Scopus and Big Band, Israeli technology has dominated cable
and IPTV deployments worldwide. IPTV solutions from Bit band, Orca Interactive, NDS and
many others have served as building blocks for this nascent market. Recently, start-ups like
Arootz, Imagine, Rayv, Context ream and more have positioned themselves to revolutionize
video delivery over the Internet
INTERNET
Broadband Internet became widespread across major homes in Israel. Bezeq stopped being
domination in the area of the landline communications, when the Hot on track offering telephony
services through the cables infrastructures.
In mid decades because of the attractiveness which the hi-speed internet and VoIP Technologies
gained amongst the Israelis, at foremost Israelis were able to conduct international conversations
without any charge or at the lower rates by the way of the Internet due to the link connecting
85
VoIP networks such as Skype and Vonage to the long-established telephony networks in Israel
and abroad
In 2008, Partner Communications Company and XFone have been joined the high-speed Internet
providers market. Just as with cell-phones, Israelis per capita own more PCs than any other
nationality in the world
Broadcasting
In 2000, the Israeli satellite television provider yes was developed. At the time it was recognized,
there were still 3 active cable companies running Israel: Tevel, Matav and Arutzay Zahav. The
rivalry with Yes caused huge loss amongst the member of cable TV operator companies which
provoke them to fuse. In order to strengthen Yes, which was somewhat new, the regulator
delayed his approval to the amalgamation of the various cable companies. The cable companies
started work under the brand-name of the Hot in 2003. The companies completed the merging in
the starting 2008. In this decade Hot and Yes makes the possible use of the digital set-top boxes,
and it becomes likely to get digital broadcasts (improvement in the quality of response of the
television channels), and furthermore also active games channels, video on demand (V.O.D) and
recently they also deliver digital set-top boxes which includes advanced DVR technologies. They
are competent of the pre-recording show (Hot Magic, Yes Max). HOT has also put a big weight
on promoting production of local Israeli movies, but YES puts more prominence on buying
foreign TV series and movies. The fight between the two companies is still not end.
Under the check up of the 2nd Israeli Broadcasting Authority, an additional Israeli earthlycommercial channel was established on February 2002 Channel 10. This move initiates a
rivalry among the commercial channels. Channel 10 bought for the hosts and actors from
Channel 2 and Channel 1. Notwithstanding these procurement actions, the channel is still
measured to be low-quality in the amount of its viewers moderately to the other channels.
In 2005, a supplementary bid took place in channel 2, in which "Knesset" and "Reshet" were
chosen to be broadcasts of the channel to the results of the decade.
Israeli News Company won the proposal to produce the terrestrial Knesset Channel.
86
All analogue terrestrial television towers were switched off where as digital distribution (Idan
Plus") is the only one Digital Terrestrial System in effect on March 30, 2010. The first phase also
includes 5 SD channels (IBA-1, IBA-33, Channel 2, Israel 10 and The Knesset Channel). The
system is DVB-T / MPEG-4 and in SFN configuration with 2 frequencies across the country
(south and north both are UHF 26 while central area is UHF 29). A second phase with further
channels is expected in the year of 2012 (also IBA-1 HD) and a third phase maybe in 2013
Mergers & Acquisition
Israeli Company
Acquirer
Deal Size
Date
DSPC (Intel)
$600M
2006
PMC Sierra
Passive
$300M
2006
Micro semi Corp
Power sine
$245M
2006
Telefonica O2
Jajah
UK Ltd
Technologies Ltd
$207M
2009
Motorola
Terayon
$180M
2007
NeuStar
Followap
$140M
2006
AT&T
Interwise
$121M
2007
Harmonic
Scopus Video
$86M
2008
Microfocus
Netmanage
$73.3M
2008
Oclaro Inc
Xtellus Ltd
$33M
2009
Padtec SA
Civcom Ltd
$35M
2008
Software AG
Jacada
$26M
2007
Viaccess
Orca Interactive
$21.4M
2008
$16M
2009
$14M
2009
Marvell
Semiconductor
Elbit Systems Ltd

RuggedCom Inc
Shiron Satellite
Communications
WiNetworks Ltd
TABLE 6.1
87
6.3 KEY PLAYERS IN COMMUNICATION INDUSTRY OF ISRAEL
Smile International and landline calls supplier, Internet service supplier
Net Vision International and landline calls supplier, Internet service supplier
Hallo - International supplier
Five cellular services universal operator
Rami Levi
Bezeq Israel's bequest national communications supplier, which mainly deliver

facilities like landline telephone service
Bezeq International International and landline calls supplier, Internet service bringer
Cellcom Wireless operator (GSM 1800 and UMTS 850/2100)
Hot Sole cable television supplier, also provides landline telephone service
Israel Postal Company it is a Government-owned company which mainly provides mail

and various banking services.
Mirs Wireless operator (current network: iDEN. Future networks UMTS 2100)
Partner (Orange) Wireless operator (GSM 901/1800 and UMTS 2100). An selfregulating licensee of Orange SA
Pelephone Wireless operator (old network: CDMAIS-95/CDMA2000/EV-DO in the

852Mhz band. New network: UMTS 850/2100)
Yes Sole DBS television supplier
COMPARISON OF INDUSTRY WITH INDIA

ITEMS
ISRAEL
INDIA
Telephone main line in use
3.5 million(2011)
32.685 million (2011)
Mobile phone
9.2 million( 2011)
893.862 million (2011)
Internet hosts
2.483 million (2012)
6.746 million (2012)
Internet users
4.525 million (2009)
61.338 million (2009)
Internet country code
.il
.in
Radio broadcast stations
AM 23, FM 15, shortwave 2
153- AM , 91- FM ,shortwave 68
Televisions
1.69 million
116 million
Television broadcast stations
24
562
88
Broadband subscribers
14.31 million
1.3 million
TABLE 6.2
6.4 INDIAS COMMUNICATIONS INDUSTRY

The Indian communications industry is developing at a much faster rate as compared to other
communication industry of the world. Starting from the last decade Indias telecom sector is
growing rapidly as compared to other Asian economies, here growth is a certainty. India is
presently the 3rd-largest mobile market in the world in terms of number of mobile subscribers.
Indian telecom market generates revenues of just about US$ 20 billion in 2006-07. However, the
industry is about to generate a compound annual growth rate of approximately 26 per cent from
2007-08 to 2010-11 and scale US$ 51 billion by 2011. It is, thus, not astonishing that quite a few
foreign companies are deciding to make huge investments in India. Not to be left behind, Indian
cellular operators have also planned investments worth US$ 16 billion in 2008-09 to fuel their
massive investment plans. The Indian telecommunications industry is able to cross a subscriber
base of 235 million; its tele-density is about twenty per cent. The Indian communication market
provides telecom service providers with a large intact potential, given the countrys growing
population and its low tele-density.
6.5 PRODUCTS/SERVICES OF COMMUNICATION INDUSTRY
SERVICE PROVIDERS
Service Providers are the companies which offer local and long-distance wire line telephone
package. Industry insiders call these POTS, for plain old telephone service. Wire line providers
consist of the great long distance service supplier like Verizon & Sprint and the RBOCs (the
Baby Bells) like BellSouth and SBC Communications.
Innovative development of the
companies is laying fiber-optic wire networks to be maintain the at a fast pace increasing data
passage, including Verizon, Level three, and Qwest.
WIRELESS SERVICE PROVIDERS
Marked by carrier consolidation and partnering to enhance geographic reach and available at
lower rate, wireless communication services have dazed up the telecom industry. Also they have
89
brought telecommunications to the far corners of the earth, together with many parts of Africa
and South America where these areas have no active wire line infrastructure, and have also made
a local market far more aggressive in the United States.
CUSTOMER PREMISE EQUIPMENT (CPE) MANUFACTURERS
Telecommunication service providers are the principal customers of the telecommunication
equipment makers. When they sell a service to a company, at that time, they buy the switch,
which can be served anywhere from 20 to 2,00,000 people, as well as other buyer of premise
equipment (CPE)-everything from the telephones to the voice-mail systems to the private branch
exchanges (PBXs). Local area networks (LAN) also required their own, hubs, switches, and
routers. The giant players here consist of Lucent Technologies, Nortel, Fujitsu, Siemens, and
Alcatel.
INTERNET
Internet in India is started with the commence of Internet services by VSNL on the auspicious
day on 15th august 1995. In other words the 48th anniversary of the Indian government. The
launch was successful as they quickly added upto 10,000 internet users within 6-7 month of the
launch. But the next decade was tough for internet experience in India.there was a narrow band
connections having speed less than 60 kbits/s (Dial up). The government came up with
Broadband policy in the year 2004 which can be define the broadband as an always on the
internet connection with download speed of 260 kbit/s or above. Then from 2005 onward there
was acceleration at the pace of the development of the broadband sector in the country. But still
it was much below the expectation of the government and the related companies due to the
resources used in last mile access which is depend on wired line technologies principally.
However this problem was solved in 2010 when the Indian government auctioned the 3G
spectrum followed by a high profile auction of 4G spectrum which sets the stage for aggressive
and invigorated wireless broadband market. Internet access in India is provided by both public
and private companies using a variety of technologies and media at the present movement. It
includes Dial-Up (PSTN), xDSL, Coaxial Cables, Ethernet, HSDPA, ISDN, FTTH,
(3G),
WiMAX, WiFi, etc. at a wide range of speeds and higher costs. The country has the world's
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third largestInternet users. The user has become over 120 million (of whom 59% users are only
access the internet through mobile devices) as of December 2011.
Total Internet connections stood at 22.40 million as of December 2011. They are estimated
exceeding 125 million users. The number of broadband users is 15 million as of the July 2012.
Cumulative Annual Growth rate (CAGR) of the broadband was about 120 per cent during the
period of 2005 to 2010. Among the technologies, DSL, whilst holding to the some extent of
more than 75% of local broadband market areas, it was little by little losing market share to the
other non-DSL broadband platforms, particularly to wireless broadband platforms.
As of January 2012, there are 150 Internet Service Providers (ISPs), which tender broadband
services in India. Public sector companies MTNL and BSNL cover the market share of 64.8 and
8 percent respectively. While from the private sector company, Bharti leads with a market share
of 11%. Cyber Cafe remains as the most important source of internet access. In 2009, about 42%
of the internet users have access from Cyber cafe, 30% users from office and 23% users from
home. However, the total sum of mobile internet users have found acceleration from 2009
onward and there was 275 million such users at the end of the September 2010, though greater
part belonged to the 2G mobile networks. According to TRAI Mobile internet subscriptions
Indias in March 2011, it increased to 385 million users.
One of the major issues, the internet segment facing is that the lower average bandwidth of the
broadband connections compared with that of urbanized countries. The average download speed
in India is about 256 kbit/s, which is the minimum speed set by TRAI as per the 2007 statistics,
whereas the international average speed was 5.8 Mbit/s during the same tenure. In order to attend
such kind of infrastructure matter the government acknowledged 2007 as "the year of
broadband". To contend with international principles of the defining broadband speed, the
Government of India has taken hostile step of proposing to the $14 billion national broadband
network to connecting the all cities, towns as well as villages with a population of more than 500
in two phases across the country which is targeted for completion by 2012-13. The network is
probable to handle speed up to the 10 Mbit/s in 63 metropolitan areas across the country and 4
Mbit/s in additional 353 cities in the country. The Internet penetration in India is also one of the
lowest in the globe. It is only accounts for 8.4% of the population compared with the OECD
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counties, where as the middling penetration rate is over 50 percent. Another major issue reported
from this sector is the digital divide of the story of development biased in favour of the urban
areas; as per the 2010 statistics, more than 75% of the broadband connections are in top 30 cities
in the country. Regulators have also tried to boost up the growth of broadband in rural areas by
promoting higher investment in rural infrastructure and subsidized tariff for the rural subscribers
under Universal service obligation scheme of the government India.
Broadcasting
Broadcasting on television began in India in the year 1959 by Doordarshan, a medium which was
run by state, it had slow extension and it had slow extension for more than 2 decades. Then in
1990s there was a change in policy and it transformed the business by attracting private
initiatives in this sector. Since then there has been no looking back. Satellite television has
increasingly shaped to the popular culture and Indian society. Till today only government owned
Doordarshan has the license for earthly television broadcast. The medium used by private
companies to reach the public is via cable television and DTH. Also DTH has obtained an
extensive subscriber base in India. The numbers shows that in 2012, India has about 150 million
TV sets at home out of which 126 million TV sets has access to cable and satellite services.
Following the economic reforms in 1991s, satellite television channels from across the world
CNBC, CNN, BBC and other private television channels gained traction in the country. There is
not any regulation to control the ownership of satellite dish antennas and also for the operating
cable television systems in the country, which in turn has been helped for an astonishing increase
in the viewership. The augmentation in the quantity of the satellite channels was also triggered
by many corporate business houses like Zee TVandStar TV group. At the starting, it was
restricted to music and entertainment channels, viewership grew, giving rise to various channels
in regional languages of the country, especially Hindi. The main news channels available in the
country were CNN and BBC World. Many current affairs and news channels sprouted in the late
1990s and it becoming vastly popular because of the different viewpoint they accessible
compared to Doordarshan. Some of the extraordinary ones are Aaj Tak (run by the India Today
group) and STAR News, CNN-IBN, Times Now, originally run by the NDTV group and their
lead anchor, Prannoy Roy (NDTV now has its own channels, NDTV Profit NDTV India and
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NDTV 24x7). Over the years, Doordarshan services also have full-grown from a single national
channel to 6 national and 11 regional channels across the country. Nonetheless, it has been gone
astray the leadership in the market, though it underwent many phases of the reconstruction in
order to contain tough competition from private channels.
Nowadays, television is the on the whole penetrative media in India with industry estimates
indicating that there are over the 553 million TV consumers and 465 million with satellite
connections, compared to the other forms of mass media such as radio or internet in India. Indian
Government has been used the popularity of TV and radio among rural consumers for the
implementation of many social-programmes together with that of mass-education. The
Government of India launched the community radio policy on 15 November 2006, which is
authorized agricultural centres, educational institutions as well as civil society organisations to
apply for the community based FM broadcasting permit. Community Radio is allowed to 100
Watt Effective Radiated Power (ERP) with the maximum tower height of 30 meters. The license
is valid for 5 years and one organization can only get one permit, which is non-transferable from
one to other and to be used for community development purposes.
6.6 MAJOR COMMUNICATION COMPANIES IN INDIA
In 1975, the Department of Telecom (DoT) was given a separate power for running the
telephone services in India.
The Mahanagar Telephone Nigam Limited (MTNL) started its services in the year 1985 for
carrying out the telephone operations in the metros cities of the country like Delhi and Mumbai.
In November 2000, the Bharat Sanchar Nigam Limited (BSNL) was set up by the Department
of Telecom.
subsequently numerous private companies as Reliance Communications, Tata Indicom, Airtel
etc in the sector came up.
BSNL
The Bharat Sanchar Nigam Limited, countrys biggest cellular service operator was set up in the
year 2000. BSNL is a state owned telecom company with its headquarters located in New Delhi.
93
BSNL is the principal land line telephone establishment in India. As of march, 2011 86.1 million
customer have been reported to be BSNL users.
MTNL
Mahanagar Telephone Nigam Limited (MTNL) was established in the year 1985, to operate
telecom operations in the key metro cities of India, Mumbai and Delhi. Company have
headquarters located in Mumbai. MTNL was the foremost company in country to initiate for the
3G services in India, having the brand name of MTNL 3G Jadoo Services which provided
options as Video calling, Mobile TV, Mobile Broadband and so forth to the customers.
Airtel
Also well-known as Bharti Airtel limited was started in July 1995, with its headquarters in New
Delhi. Airtel conducts its operations in as many as 20 countries across the globe and it is also
ranked 5th as telecom service provider across the world. As per the April 2012, figures show that
the Airtel has been over 164.61 million users, which makes it the principal mobile service
operator in the country. Its service includes both 2G and 3G facilities.
Reliance Communications
Also famous as RCOM was set up in 2004, with its headquartered in Navi Mumbai. Reliance
Communications as of at the present has more than 140 million users all across the globe.
Aircel
Aircel was existed in 1999, with its head office in New Delhi. It is collaboration of
Maxis
Communications and the Apollo Hospitals.

Vodafone Essar
Vodafone Essar was started in 1994 with its head quarters at Mumbai. The company provides
services to 24 telecom circles across country.
Tata Indicom
The Tata Teleservices was initiated in 1996.it has head quarters in Navi Mumbai.
94
Idea Cellular
Idea Cellular was started in 1995, with its headquarters in Mumbai. It is also provides 3G
services to its customers.
Virgin Mobile
Virgin Mobile initiated its services in India in 2008, March. It is a United Kingdom based
company.
Uninor
This Company is collaboration between Telenor Group and Unitech Group. It was initiated in
2009.
Comparison of companies:
In million US $
Particulars
Allot communications
Bharti Airtel
current assets
198,241
2,714.4
541
1,410.8
207,689
28,789.4
32,961
8,961.0
4,964
930.8
207,552
28,789.4
long-term assets:
total assets
current liabilities:
long-term liabilities:
total liabilities and shareholders' equity
TABLE 6.3
95
Interpretation:
Current asset of Allot communication is much more than BhartiAirtel. Total asset of
Allot communication and BhartiAirtel is 198,241 and 2714.4 in million US $
respectively.
Total liability of Allot communication is higher than BhartiAirtel.
In million US $
Particulars
Comverse
Idea cellular
current assets
1,027,833
495.3
1562031
390.5
2,589,864
5,975.5
982,444
1,613.5
1084188
1973
Total liability
2,066,632
3,586.0
total liabilities and shareholders' equity
397,501
5,975.5
long-term assets:
total assets
TABLE 6.4
Interpretation:
Current asset of Comverse is much more than Idea cellular. Total asset of Comverse and
Idea cellular is 2,589,864 crores and 5,975.5 crores respectively.
Total liability of Comverse is higher than Idea cellular.
In RS crore
96
B-communications
current assets
long-term assets:
total assets
Total liability
Reliance
Communications
9001.8
2439
26055
2731
35202.6
73068
6588
1932
21546
15668
28134
73068
TABLE 6.5
Interpretation:
Current asset of B-communication is more than reliance communication while total asset
of reliance communication is more as compare to B-communication.
Current liabilities of B-communication is more than three time as compared to reliance

communication.
Introduction to agriculture in Israel:
The State of Israel covers an area of approximately 20,000 Km2 but only 20% of it is arable land
while 60% of Israel is desert and just 10% of the population lives there. The remaining 40% of
the country is semi-arid land. It is densely populated, and holds 90% of the population. Israel's
population has a relatively high standard of living with an annual GNP of nearly US$ 18,000 per
capita.
Facts about Israel Agriculture
The
The
worlds
worlds
most
developed
highest
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reused
irrigation
wastewater
methods
rate
* The most advanced agriculture technologies on the international market for water heating and
electricity generation
Research and Development
The agricultural sector is based almost entirely on R&D, implemented by cooperation between
farmers and researchers. Through a well-established extension service system, research results
are quickly transmitted to the field for trial and implementation, and problems are brought
directly to the scientist for solutions. Agricultural R&D is carried out primarily by the Ministry
of Agriculture's Agricultural Research Organization. Most agricultural research institutes in
Israel maintain close relations with the Food and Agriculture Organization of the United Nations,
ensuring a continuous exchange of information with other countries. Israeli agriculturists have
pioneered agricultural biotechnology, trickle-drip irrigation, soil solarisation and the sustained
use of industrial waste water for agriculture.
6.7 OPPURTUTNITIES
Communication is now a strategic sector and the importance of ICT infrastructure is
growing. Competitiveness of the countries will depend increasingly on the strength of its
ICT infrastructure.
India and Israel complement each other very well. Israel has A developed technological
base in this sector, a developed process of innovation and R&D, and A proven set of
products in the sector. While India has strong manufacturing and entrepreneurial
capabilities, a huge market that needs telecom equipment and Strong software talent.
India and Israel does not do trade on the communication sector. It means that neither
India nor Israel does any export or import of products that belongs to this sector. So there
is a very much possibility that trade can happen sometime in the future.
During our research we have also found out that few industrialists from Israel has visited
India for finding out opportunities in this sector. So there is a strong possibility that there
may be a trade between the two countries sometimes in near future.
Both India and Israel has a strong requirement for Skilled human capital requirement
And Global nature of products for plugs and play.
98
The major findings we found during our project are that there is a need of frequent new
product, services and tariff introductions. There is a need of bundling of services.
The utmost challenge that India and Israel currently face is the shortening of product life
cycles in the communication sector.
Government needs to support IPR creation by Indian companies as is done by countries
worldwide.
99
CHAPTER 7
Agriculture Industry of Israel
100
7.1 INTRODUCTION
Today, agriculture represents a mere 2.7% of the Israeli gross domestic product (GDP) and just
fewer than three per cent of exports, compared to an average of 30% of exports during the 1960s
- the heyday of the famous Jaffa orange. Nevertheless, despite the decline in its importance
relative to other economic branches, agriculture has grown in absolute terms and played an
important part in Israel's economy for more five decades. In 2010, the total amount of land
devoted to agriculture was 3,887 thousand dunams, nearly three times the amount of devoted
land from 1948. Out of that area, field crops comprised 1,316 thousand dunams, vegetables 741
thousand dunames, citrus 176 thousand dunams, and aquaculture made up an additional 22
thousand dunams.
International Collaboration
Many of Israel's innovative agricultural methods and advanced agricultural technologies have
been shared with the United States and other nations around the world. This international
collaboration and cooperation benefits not only those countries receiving Israeli know-how to
maximizing and improving their agricultural products, it also helps Israel build friendships and
break down barriers that will enable it to continue to make advancements into the future. Under
the auspices of the Binational Agricultural Research & Development Foundation (BARD),
Israeli, American, Canadian and Australian farmers and scientists have collaborated on more
than 1,100 projects over the past three decades. This BARD-sponsored research has led to
innovative developments, new technologies and renewed focus in drip irrigation, pesticides, fish
farming, livestock, poultry, disease control and farm equipment.
Agriculture and the Future
A combination of sophisticated, applied science, determination and government support have

helped Israel's farmers to modernize and adapt to changing geopolitical, market and climatic
conditions, creating a strong base from which to proceed in the coming decades. Israel's
agriculture continues to thrive, and supplies most of the country's food needs, though
profitability in export sectors has declined sharply in recent years. Among the numerous
101
problems the crop-growing sectors have contended with since the State was founded, water
scarcity remains the principal - and growing - threat.
Israeli Agro-Technology (2001)
Israel is one of the most densely populated countries in the world, and yet only 20% of the land
is arable - and half of that has to be irrigated. More than half of Israel is arid or semi-arid, and the
rest of the country is dominated by steep hillsides and forests. Yet thanks to cutting-edge
technology, Israel not only produces most of its own food, but also exports $1.3 billion worth of
agricultural produce annually.
Presentation of agriculture industry in Israel:

Employees of agriculture industry are 5% of Israel's working population, and it contribute total
6% of the national GDP, it is playing very important role in Israeli culture and history. Increase
the amount of land which is under cultivation, the government finished the Israeli National
Water Carrier (INWC); it brings water from the Sea of Galilee. Most of agriculture crops are
vegetables, cotton, beef, poultry and dairy products, and citrus and other fruits. Citrus fruits are
main export crops of the country. Soil and climate of Israel give appearance and flavor to the
fruits that demanded as high price in the market of world.
International relationship:
Most of Israels latest agricultural methods and latest agricultural technologies have been mutual
with the United States and other few countries. Under the name of the Bi- national Agricultural
Research & Development Foundation (BARD), farmers and scientists have collaborated on more
than 1,100 projects in past three decades. This BARD-sponsored research has been led to
pioneering developments, latest technologies and rehabilitated focus in drip irrigation, pesticides
and insecticide, fishing, poultry farm, controlling of disease and agriculture equipments. Few of
examples of projects include: Improving wheat-seed proteins, spray technology which decrease
the effect of pesticides, it has control of pathogens, recognition of QTL's and organize postharvest decay in fruits and vegetables. With the reason of accomplishment and rapid execution of
BARD projects, other mutual programs had been set up between Israel and Jordan, Authority of
the Palestinian, Union of the European and various states of United States.
102
Since 1993, the IALC had funded more than 100 projects worth more than $12.4 million. The
awareness gained from this relationship which has been used to benefit and countries from
Kenya and Ethiopia, to Uzbekistan and Kazakhstan, to Australia and Brazil.
Major troupes and overall products/services offered by the industry
Agriculture includes following all things into its umbrella:

1. Floriculture
2. Fruits
3. Vegetables
4. Aqua culture
5. Poultry and Beef
6. Dairy farming
7. Field crops
8. Live stock
9. Fishing
10. Wheat
11. Groundnuts
(Peanuts)
12. Chickpeas
13. Irrigation
103
7.2 MAJOR PLAYERS OF THE INDUSTRY IN ISRAEL:

Evogene: it is based in Rehovot. Evogene Addressing the global demand for food, feed and fuel
Protalix: It is based in Carmiel. They conduct research on producing therapeutical proteins in
plant cells.
ICL: ICL Fertilizers is one of the worlds largest producers of potash
Protalix: It is a biopharmaceutical company focused on the development and commercialization
of recombinant therapeutic proteins based on our proprietary Pro-Cell Exprotein expression
CHS Inc: Activities include grain merchandising and transportation, sunflower and soybean
processing, wholesale fertilizer, animal feed production and sale, and various farm supplies.
7.3 PERFORMANCE OF AGRICULTURE INDUSTRY IN INDIA
Department of Agriculture and Cooperation under the Ministry of Agriculture is the vital
organization responsible for growth of the agriculture sector. It is responsible for formulation and
execution of national policies and programmers aimed to get rapid agricultural growth through
minimum utilization of land, water, soil and plant resources of the country.
Agriculture being a State subject, it is the State Governments responsibility to ensure growth
and improvement of the sector inside their respective State.
Few important initiatives have been taken in nearby years by the Government policies like
1.Rashtriya Krishi Vikas Yojana (RKVY)
2. National Policy for Farmers, 2007 Expansion of Institutional Credit to Farmers,
3.National Rural Health Mission
4.National Food Security Mission,
5. Rashtriya Krishi Vikas Yojana
6.Integrated Food Law
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7. Legislative Frame work for Warehousing improvement and guideline, Protection of Plant
Varieties and Farmers' Rights (PPVFR) Act, 2001,
8. National Bamboo Mission.
7.4 MAJOR PLAYERS OF THE INDUSTRY IN INDIA:
Agriculture is most important part of India and its economy at present. India is among the top
agriculture producers in the world. This sector gives around 52% of the total jobs available in
India and it contributes near around 18.1 % to national GDP.
(1)Raasi Seeds- seeds
(2)Dupond India - agricultural products
(3)National Agro Industries -Seed cum fertilizer drills
(4)Poabs Organic - Organic agro-based products
(5)Phalada Agro Research Foundation - organic products
(6)Advanta India - seeds
7.5 EXPORTS OF ISRAEL TO INDIA IN 2011
sralucitraP
Value('000 U.S $)
Coffee, tea, mate and spices
Fertilizers
400043
Fruit and nuts; peel of melons and citrus
720
Oil seeds, grains, fruits, industrial and medical plants, straw and fodder
3580
Oils and fats from animals and plants; wax animal or vegetable
165
Preparations of vegetables, fruits, nuts and other plants
1066
Vegetables, roots and tubers food
385
TABLE 7.1
105
Israel Imports from India 2011
Particulars
Value('000 U.S $)
Dairy produce, eggs, natural honey; animal products suitable for human
consumption
Fish, crustaceans and mollusks
1150
Lac; resins, vegetable saps and extracts other
2453
Live trees and other plants, bulbs, roots and other garden plants
228
oil seeds, grains, fruits, industrial and medical plants, straw and fodder
11832
Preparation of meat, fish or other aquatic invertebrates in the water
109
Products of animal origin
40
Vegetable plaiting materials, vegetable products
916
Vegetables, roots and tubers food
1586
TABLE 7.2
Exports of total agricultural products by India and Israel in 2011:
India: $34323 million
Israel: $ 2456 million
Import of total agricultural products by India and Israel in 2011:

India: $ 22564 million
Israel: $6129 million
7.6 WTO- GENERAL TRADE IMPLICATIONS FOR THE SELECTED INDUSTRY &
LEGAL ASPECTS/BARRIERS APPLICABLE TO THE INDUSTRY
The country has special agreement with WTO to encourage agriculture in world for continues
supply of potential famines and fluctuating harvests. In Uruguay round agreement WTO member
agreed upon sets of principals this round achieve in relation of agriculture. From the Inception
Israel and US have a good relation in business and they have US-Israel FTA (free trade
agreement). They signed this agreement on 2001 and almost all tariffs eliminate by this FTA. By
this way Israel allow US to access long list of food product from country. Agriculture sector
contribute countable in Countrys GDP of Israel so by the law they have various prohibition and
restriction on import of agriculture product by policy.
106
India also maintains cascading of tariff, import charges and other taxes that taken together are
generally cost prohibitive. Indian tariffs regime characterized by disparities between bound rates
and applied rate and its schedule is not too transparent and easily accessible location which
impose burden for importers.
Although liberation and open to market India has continue to high tariff compared to other
countries and investment rules are still too restrictive. Even liberation of India in 1990 there are
strictly restriction of foreign investment in India after that in some of sector they relax the
restriction and allow foreign to enter in some of selected sector. Still India is some of the very
few countries that ban on foreign investment in retail. Rather than agriculture named countries
India now leads in service sector. India has many Bilateral Trade Agreements India-Shree Lanka
Free Trade Agreement, Trade Agreement with Bangladesh, Bhutan, Maldives, Korea, and China
& Also India-Nepal Trade Treaty. Agreement with Singapore and member of ASEAN are the
agreement for develop their economies and agriculture sectors.
7.7 PRESENT TRADE POLICY

Israel:
The Department of Import Policy, located in foreign Trade Administration is responsible for the
import policy of Israel. Since 1990, era of liberalization, International Trade Policy has been
simplified. The policy fully complies with Israel's commitments taken in the framework of the
World Trade Organization (WTO). Israel has open and transparent Importation regime. The Free
Import Order outlines the conditions and requirements for importation of goods into Israel, using
the Harmonized System as the basis for information. Assistance in classification is available
in Classifications and Taxation on Imports, the Israeli Department of Customs and VAT,
according to the products-groups to which the goods belong.
Israel has removed most of its import quotas, except on some of agricultural products, which are
under Israel's international agreements.
Export subsidies: Israel provides export subsidies to a number of agricultural products like cut
flowers, vegetables, citrus and other fruit, goose liver and cotton. In 1997/1998, export subsidies
of around US$ 1 million were granted only to cut flowers. Israels current policy is aimed at
reducing the provision of such export subsidies to a minimum. Israel has also made export
107
subsidy commitments regarding the six-product groups under the WTO Agreement on
Agriculture.
India
In India, main purpose of trade policy is to act as an active instrument of economic growth and
generate employment . The new Exim-Policy is principally a roadmap for the development of
India's foreign trade. It comprises the basic principles and points the path in which we propose to
go. It would obviously require changes from time to time. In Agriculture sector, a new scheme
called the Vishesh Krishi Upaj Yojana (Special Agricultural Produce Scheme) for endorsing the
export of fruits, vegetables, flowers, minor forest produce, and their value added products has
been presented. And Import of capital goods shall be allowed duty free under the EPCG Scheme.
Thus, Due to liberalisation, there are no more restriction on export and import. In Israel there is
need to take permission for the import and export of goods which are hazardous to human and
which affect the security of the country. It includes some of the agriculture product also. India
promotes the export through different schemes and there is subsidy provided on some of the
goods.
7.8 TECHNOLOGICAL ENHANCEMENT IN AGRICULTURE INDUSTRYISRAEL

Agricultural R&D is carried out by the Ministry of Agriculture's Agricultural Research
Organization. To have exchange of information with other countries the research institute keeps
close relation with the agriculture department of UN. Israeli agriculturists have now come up
with the agricultural biotechnology, trickle-drip irrigation, soil solarization and the continued use
of industrial waste water for agriculture. Israeli designed and manufactured computers are widely
used to harmonize daily farming activities.
Israel has become the world's leading producer of drip-irrigation systems. Drip irrigation has
permitted the country to develop one of the most efficient water systems in the world, which it
needs badly, since it uses up effectively every drop of available water each year. Israel is also a
leader in the development of programmed systems used to speed up harvesting and other
operations.
India:
108
In India, to spread and boost knowledge of agriculture among the youth generation, government
has launched new programmes and courses with specialization in agriculture. Modern
Agricultural include the improved farming techniques and the usage of irrigation and high-yield
grains which results into increased production. Its measures are being undertaken by government
authorities to exterminate the inadequacy of monsoon by announcing water dams and river
project for active irrigation. Measures are been taken to expand farm land area and with
quality grains. Modern improved irrigation techniques have been adopted by farmer which is
used to help the farmers when there is no proper rain. Improving the use of fertilizer, especially
on rain fed land, also would help to increase the production.
Thus, In case of technological enhancement in agriculture, Israel has very good technology
compare to India. Israel has developed irrigation and harvesting techniques due to lack of water.
Israeli agriculturists have initiated agricultural biotechnology, trickle-drip irrigation, soil
solarization and the constant use of industrial waste water for agriculture. Israelie has developed
computerised system for irrigation. In India, there is major problem of inadequate monsoon so
Government has undertaken the projects for providing water to farmers, which lead to better
irrigation system. Improvement in irrigation and fertilizer lead to more production.
7.9 REQUIREMENTS OF RESOURCES FOR THE INDUSTRIAL OPERATIONS AND

AVAILABILITY OF THE SAME:
The overall investment pattern in Israel was found to be very typical in nature. Majority of the
companies start up their business as public limited companies. On the basis of their products and
services that they offer they get the benefits of subsidies from the government of the country. In
Israel it was trend in the past that Government was giving subsidies to the majority of the
agricultural industries. But now with the passage of time this trend is decreasing.
The major resources which are required to start up the industrial operations in any country will
be same land, labour, capital etc. As such the arable land is limited in Israel so it is better for the
country to invest in those industries which will develop the better technologies which will help
them in producing maximum out of that limited arable land and with minimum of efforts and
manpower required.
109
Availability of labour is not a question at all because the labourers who work in the farms are
also very educated and do experiments on their own and come with some new techniques of
farming i.e. people in Israel are of very developed mind and they always want new and better
things in life. Out of total labour force of 3.227 million people only 2% is deployed in agriculture
industry, remaining 98% of the labour force is available for the industries and service sector.
7.10 PEST ANALYSIS:

ISRAEL:
Political:
The Ministry of Agriculture helps supports and keeps watch on the activities of the country's
agricultural sector. Since many years, agriculture was tightly controlled, with the allocation of
production and water quotas for each crop.
Economy:
Agriculture has played a more important role in Israeli national life than its economic
contribution would indicate. It is having central place in Zionist ideology and is the major
contributing factor in the settlement and letting the immigrants to settle although its incomeproducing importance has been minimal. As the economy has developed, the importance of
agriculture has declined even further
Social:
Israels society is composed with a wide spectrum of lifestyles, ranging from religious to secular,
from modern to traditional, from urban to rural, from communal to individual. The people are
very hardworking and dedicated that they helped to turn the deserted land into fruitful land.
Technological:
High-tech farming is the only way to survive. Indeed, market forces at home and abroad, and a
scarcity of land, labour and water are forcing major changes on Israeli agriculture. Increasingly,
there is a shift from extensively-farmed, mass-produced crops to intensive growing of niche
products based on scientific and technological R&D.
110
INDIA:
Political:
Political influence on Indian agriculture is very much widespread. It ranges from incorporation
of new policies for the farmers to the steps taken on their welfare and development. India lacks
an Agricultural Policy at the National level and the onus of framing policies for agricultural
development lies with the State government.
Economy:
The Indian Agriculture provides more than 8.5% of the total exploration of the Indian economy.
Indian economy is becoming more and more dependent upon service sector and industrial sector,
Indian Agriculture Industry plays a vital role in the development of the Indian economy.
Social:
India is one of the oldest civilizations with a kaleidoscopic variety and rich culture heritage. It
has achieved multifaceted socio economic progress.
Technological:
The governments long term vision on Information and Technology in the Agriculture Sector
aims to bring farmers, researches, scientist and administrator together by establishing system
known as Agriculture Online for the exchange of ideas and information. A land information
system have now a days started using Geographic Information system and remote sensing so as
to help the farmers in planning and facilitating decision making and planning at the local level.
7.11 COMPRATIVE ANALYSIS OF ISRAEL AND INDIAN COMPANIES:
1. Comparison of Dhanuka & Makhteshim Agan Industries:
Makhteshim Agan is the worlds leader in branded off-patent crop protection solutions. We offer
a wide range of products that protect against destructive weeds, insects and fungi and increase
crop production by preventing yield losses. This is how Makhteshim Agan helps solve one of the
greatest challenges facing the world today food security. The products of Makhteshim Agan
are Herbicides, Insecticides, Fungicides, Non-Crop applications.
111
Dhanuka Group started its journey in 1980 and now has achieved a new height in Agro-chemical
industry. Dhanuka Group has been instrumental in providing crop specific, eco-friendly high
quality crop care products. Dhanuka groups products are agri chemical, seeds fertilizers
Insecticides, Herbicides, Fungicides, Plant Growth Nutrients,Others.
Thus, both the companies are providing the products for the betterment of agricultural
production. They are providing products which are helpful to protect crops from insect or any
other thing. Market Capitalisation of Makhteshim Agan is 8,54.080 and Dhanuka is597.23
Profitability of the Makhteshim Agan is better in 2010-11 as compare to 2009-10. In 2009-10
company was making loss. Gross Profit Margin is increased around 4% in 2010-11 compare to
last year. Net Profit Margin, Return on Capital Employed and Return on Net Worth also increase
in 2010-11. Liquidity of the Makhteshim Agan shows the negative affect compare to last year, as
it reduces as compare to last year. Inventory turnover ratio has decreased and Total Asset Ratio
has increased. Thus, we can say that profitability of the company has increased but liquidity and
management efficiency cannot be improved.
Profitability of the Dhanuka is better in 2010-11 as compare to 2009-10. Gross Profit Margin and
Net Profit Margin has increased as compare to last year. But Return on Capital Employed and
Return on Net Worth decrease in 2010-11. Liquidity of the company shows the positive affect
compare to last year. Current Ratio and Quick Ratio increase compare to last year. Debt Equity
and Long Term Debt Equity Ratio decrease. Thus, we can say that company has a good financial
position.
Overall financial position of both the company is good and both the companys financial position
has improved in 2010-11. Gross Profit margin of Makhteshim Agan is around 32% and Gross
Profit margin of Dhanuka is around 14%. While Net profit Margin of Makhteshim Agan is
around % and of Dhanuka is around 10%.
2. Comparison of ICL & NFL:
112
ICL Fertilizers offers also specialty fertilizers for the growing modern agricultural arena, like
drip irrigation, greenhouses, etc. Our soluble fertilizers are responding to the need of higher
yields and better quality per cultivated land and to the growing scarce of water and arable land.
These specialties are marketed by ICL Specialty Fertilizers.
NFL, incorporated in 1974 is India's largest Central Public Sector Enterprise in Fertilizers Sector
with a turnover of over Rs. 7300 crores and an overall annual installed capacity of 32.31 lakh
tonnes of Urea. NFL has five Urea plants located at Nangal & Bathinda in Punjab, Panipat in
Haryana and Vijaipur I & II plants in Madhya Pradesh. Apart from producing Urea, NFL is also
engaged in manufacturing & marketing of Industrial products, trading of complex fertilizers and
other Agro Products.
Both the companies are providing fertilizers in the country. They both are producing the
fertilizers as per the requirement of the countrys agricultural land. Market Capitalization of ICL
is 5981.14 and market capitalization of National Fertilizer is 2,317.98
Profitability of the ICL is better in 2010-11 as compare to 2009-10. Return on Capital Employed
and Return on Net Worth also increase in 2010-11. It has very good profitability. Liquidity of the
ICL shows the negative affect compare to last year. As the entire ratio has deceased as compare
to last year. Thus, we can say that profitability of the company has increased. Company
maintains its profitability well.
Profitability of the NFL has decreased in 2010-11 as compare to 2009-10. Return on Capital
Employed and Return on Net Worth also decrease in 2010-11. It shows that companys
profitability has reduced as compare to last year. Liquidity of the NFL shows the negative affect
compare to last year. As the entire ratio has deceased as compare to last year. Thus, we can say
that financial performance of the company is declining as compare to last year.
ICL has very good profitability as compare to NFL, and ICL financial performance shows the
increasing trend while NFLs performance is declining. Gross profit Margin of ICL in 2010-11 is
around 45% ,while gross profit margin of NFL is only 3%. Net Profit Margin of ICL in 2010-11
is 21% and of NFL is 2%. Thus it shows that NFL is not performing well as compare to ICL.
113
3. Comparison of Evogene & Advanta India:

Evogene is a world leading developer of improved plant traits, such as yield and drought
tolerance, for a wide diversity of key crops through the use of plant genomics. The company
focuses on utilizing its proprietary computational genomic technologies to provide a complete
solution for plant trait improvement through combining state of the art biotechnology and
advanced breeding methods. Evogene is currently focusing on developing through means of
biotechnology and advanced breeding improved traits for crops that feed the world, including
corn, soybean, cotton, canola, rice and wheat, as well as castor for the production of bio fuel.
Advanta utilizes with the Molecular Marker Technology in some crops, while building up value
added biotech traits through seeds. A cash rich company with the ability to invest in the future,
Advanta with its strong network of technology collaborations is a preferred partner for the
technology providers. Advanta has a unique
to capitalize on future potential benefits of
innovation in the hybrid seeds industry. The company has an outstanding base, both in terms of
its market share in key crops and its proprietary products and expertise.
Both the companies are focusing on providing the technology for the improved seeds and crops.
Both want to provide better bio technology to the farmers. Market Capitalization of Evogene is
711.38 and Market Capitalization of Advanta India is 1689.60.
Profitability of the Evogene is better in 2010-11 as compare to 2009-10. In 2009-10 company
was making loss. Gross Profit Margin is decreased around in 2010-11 compare to last year. But
Net Profit Margin have increased, in 2009-10 it was making loss now it makes profit. Return on
Capital Employed and Return on Net Worth also increase in 2010-11. Liquidity of the company
shows the negative affect compare to last year, as debt equity ratio reduces as compare to last
year. But current ratio and Quick ratio increased. And Total Asset Ratio has decreased. Thus, we
can say that profitability of the company has increased. Company has improved its position as
compare to last year.
Profitability of the Advanta India has decreased in 2010-11 as compare to 2009-10. Return on
Capital Employed and Return on Net Worth also decrease in 2010-11. It shows that companys
profitability has reduced as compare to last year. Net Profit Margin of the company shows
114
negative result in 2010-11. Liquidity of the company shows the same result as compare to last
year, as Current Ratio and Quick Ratio are almost same in 2010-11 as compare to 2009-10. Debt
Equity Ratio and Long Term Debt to Equity have increased. Thus, we can say that financial
performance of the company is declining as compare to last year.
Gross Profit Margin of Evogene in 2010-11 is 45%. While gross profit margin of Advanta is
12%. Net profit Margin of Evogene in 2010-11 is 4% and Net profit Margin of Advanta is -3%.
Thus, Advanta is making losses in 2010-11 but Evogene has improved its position and making
profit. Position of Evogen is improved as compare to Advanta.
4. Comparison of CHS and GNFC:
CHS Inc. is a leading global agribusiness owned by farmers, ranchers and cooperatives across
the United States. Diversified in energy, grains and foods, CHS is committed to helping its
customers, farmer-owners and other stakeholders grow their businesses through its domestic and
global operations. CHS products include refined vegetable oils, soy and wheat flours, textured
soy protein, and specialty soy protein products and isoflavones. CHS is committed to meet
changing global crop nutrients market needs and to provide wholesale dealers with a
competitively priced, dependable long-term supply.
Gujarat State Financial Corporation (GSFC) is a pioneer term lending development financial
institution in the State of Gujarat. It is created under the State Financial Corporation Act, 1951
passed by Parliament. GSFCs mandate is to provide finance to small and medium scale
enterprises. Products of GSFC are Fertilizer, Bio Fertilizer, Bio-Fuels, Plant Tissue Culture,
Seeds, Bio tech Products.
Both the companies are focusing on the nutrients of the crops. They are providing improved seed
for better plant and products for better fertility of the soil. GSFC has wide product range as
compare to CHS. Market Capitalization of CHS is 394.91 and market capitalization of GSFC is
2,337.07.
Profitability of the CHS is better in 2010-11 as compare to 2009-10. Return on Capital Employed
and Return on Net Worth also increase in 2010-11. Liquidity of the company improves compare
115
to last year. Current ratio, Quick Ratio, Debt Equity Ratio and Long Term Debt Equity Ratio
increase as compare to last year. Thus, we can say that profitability of the company has
increased. Company maintains its liquidity and efficiency properly.
Profitability of the GSFC is better in 2010-11 as compare to 2009-10. Gross Profit Margin and
Net Profit Margin has increased as compare to last year. Return on Capital Employed and Return
on Net Worth also increase in 2010-11. Liquidity of the company shows the positive affect
compare to last year. Current Ratio and Quick Ratio increase compare to last year. Debt Equity
and Long Term Debt Equity Ratio increase. Thus, we can say that company has a good financial
position.
Both the companies financial performance shows increasing trend and both have better position.
Gross Profit Margin of CHS is 4% in 2010-11 and Gross Profit Margin of GNFC is 22%. Net
Profit Margin of CHS is 3% in 201-11 and Net Profit Margin of GNFC is 16%. GNFC has better
profitability as compare to CHS, but market capitalization and product range of GNFC is more
than that of CHS.
7.12 OPPORTUNITIES
In Israel, there is major import of Field Crops, Seeds and Sugar so India has to enter in to
Israel market through exporting them the agriculture products like Field Crops, Seeds and
Sugar. It can be possible for India because In India, Sugar and crops productions are good
and India is exporting it to other country also. But there is a barrier to enter into the Israel
market due to their Import Policy, as Israel has Foreign Trade Agreement with other
countries.
India is growing in the fertilizer so India has to enter in to Israel market by exporting
them fertilizer.
Israel is ahead than India in case of Agriculture Technology so India can adopt their
technology to grow more in Agriculture Technology.
Now a Days, India is facing the problem of irregular rain fall which affects the
agriculture production. So India can learn the irrigation system of Israel and can avoid
this problem.
116
Self-start up companies with government provided subsidies is a great option to start up a

business in agricultural industry in Israel.
Joint ventures and mergers are again a good option to enter into that country because they
are already well ahead in that agricultural technology industry.
Joint ventures and acquisition will be an easy way to get the well established brand of the
country but cost of acquiring the same may be high.
There are no specific trade barriers that will hamper the entry of Indian companies into
that country and particularly that industry.
With the intention of lowering costs, increasing yields, improving quality and saving
manpower, innovative agricultural machinery and electronic equipment have been locally
designed and manufactured, and are widely used.
Wide usage of the locally manufactured industry will also motivate the entry of the
Indian companies in that agricultural technology industry.
Locally developed agro technologies include computerized fertigation, which injects

fertilizer through the irrigation system, simple, gravity-based drip systems for developing
countries, and advanced high temperature and humidity control methods, that provide
healthy environments for poultry, flowers, out-of-season vegetables and the like.
India can adopt the technological advancement that have being adopted by the Israelis i.e.
the drip irrigation concept which they have used and made the barren land into irrigated
land.
The Israelis also convert the sea water into reusable water that can be used by the farmers
in the agriculture production. As India has good sea coast line they can convert the sea
water into usable water that will help to serve the farmers with water when there is no
good rain.
Indian companies will also have a chance to create the brand image of all these
technologies as foreign market brands into that country that will allow them to export
these machineries into Israel.
Legislative framework regarding food quality standards and warehousing of ready agro
plants and products will help to maintain the very good quality of agro products with the
117
larger amount of production thereof. It will thus create demand of quality agro production
in world food market by other needy countries of the world.
Agriculture covers the major part of Indian economy, major contribution in GP as well as
providing jobs. India can export agro and food products to other countries like USA,
Japan, and Russia which do not have a good and fair climate conditions for development
of agricultural products. Thus foreign exchange can be brought by export.
India can share its technique of farming with Israel and can learn from it to adopt newly
researched technique which uses very less amount of water. Citrus fruits and flowers can
be imported from Israel and some other crops which we are producing in a large supply
can be exported to them to fulfil need of both the countries by this exchange trade.
A healthy and good growth of agriculture industry will automatically fetch a good poultry
and cattle breeding which will help a healthy growth to dairy industry. India is producing
dairy products on a larger and cheap rate , which can generate a good foreign currency by
exporting them to the dry and deserted areas and countries like UAE and Saudi Arab
countries.
118
CHAPTER 8
Banking Industry of Israel
119
8.1 INTRODUCTION
In its sixty-first year of independence, Israel had a strong, stable, and profitable banking system.
The favorable macroeconomic fundamentals that have cushioned the banks operations in the
recent years are clearly reflected in the banks performance, financial results, and exposure to
risks
Forces for change in Israeli Banking System
Deregulation and opening-up to foreign competition
Banking in the emerging economies was traditionally a highly protected industry, living off good
spreads achieved on regulated deposit and lending rates and pervasive restrictions on domestic
and foreign entry
Technology
The major issue about new IT is its impact on the processing of information, which is the very
essence of the banking business. Perhaps the most significant innovation has been the
development of financial instruments such as derivatives that enable risk to be reallocated to the
parties most willing and able to bear that risk.
Banking Crises
There were many banking crises during the 1990s, often occurring shortly after the external and
banking systems were deregulated. Despite all the attention given to the complicated derivative
products that have led to the high-profile collapses of some individual banks, most systemic
banking crises are still caused by poor lending.
Credit Quality
During the first half of 2012, the risk level of companies in the economy remained high
compared to the economic boom years, although it is lower than during the height of the crisis in
120
200809. This development is also noticeable in the banks' internal ratings and in the ratio of
loan loss provisions to total credit which was 0.4 percent in June 2012.
Current Performance Scenario

Balance-sheet credit has increased by 3 percent, similar to the GDP growth rate. Retail credit
continued to expand, particularly housing credit, the growth rate of which accelerated beginning
in the second quarter as a result of the resurgence in the housing market.
The core tier 1 capital ratio of the five banking groups increased from 7.9 percent to 8.3 percent
as a result of the new capital targets, and as of June 2012, the core capital ratio in all of the
banking groups was not less than 8.0 percent.
Securities Portfolio
The securities portfolio of the five banking groups totaled NIS 168 billion in June 2012,
constituting 14 percent of total assets (Figure 10). During the first half of the year, there has been
an increase of NIS 22 billion in the securities portfolio, resulting from the purchase of Israel
government bonds (reflecting an annualized growth rate of 30 percent).
8.2 MAJOR PLAYERS IN THE BANKING INDUSTRY OF ISRAEL
The major players in the banking industry of Israel are as follows:

Banking
Group
Established Number
Total
Share
of
Assets
total
total
total
Branches
(NIS
banking
banking
banking
121
of Share
of Share
of
billion)
system
system
system
assets
credit
deposits
1921
320
273.3
30.0
31.3
29.1
Bank Leumi 1902
232
272.8
29.9
29.9
30.2
1935
195
154.8
17.0
14.2
17.7
1923
123
86.3
9.5
10.9
9.7
1975
103
71.9
7.9
7.3
8.4
Hapoalim
group
group
Discount
Bank group
MizrahiTefahot
Bank group
First
International
Bank group
TABLE 8.1
8.3 OVERALL PRODUCTS/SERVICES OFFERED BY THE BANKING INDUSTRY OF

ISRAEL
Current accounts - typically used for everyday banking, but offering low interest rates.
Savings accounts - more competitive interest rates (possibly a variable rate), with higher
rates of interest on longer-term accounts, with limited short-term access to funds.
Fixed-term accounts - a defined rate of interest for a fixed term - typically ranging from a
month to several years. They may offer little or no access to funds until account maturity.
Credit cards (Visa and MasterCard) are widely used and accepted in Israel, and credit
cards can be used to withdraw cash from ATMs.
122
Cheques are widely used and accepted in Israel as a form of payment, and you can postdate cheques for up to a year ahead, and even deposit post-dated cheques (which will be
credited to your account when the due date is reached).
ATMs are widespread, with services available 24 hours a day. Using an ATM card is
typically cheaper than using a credit card to withdraw cash.
8.4 PRESENT TRADE WITH QUANTITY AND AMOUNT OF THE BANKS IN ISRAEL
Bank Hapoalim
Number of Branches: 320
Share of total banking system assets: 30.0
Share of total banking system credit: 31.3
Share of total banking system deposits: 29.1
Mizrahi Tefahot Bank
Total Assets (NIS billion): 86.3
Discount Bank
Share of total banking system assets: 17
123
Bank Leumi
8.5 TECHNOLOGICAL ADVANCEMENT IN ISRAEL

As for us (the customers) we have ATMs, Cash deposit machines, online banking, phone
banking etc which are all fruits of technological advances which have made our banking
experience much easier.
8.6 REQUIREMENTS OF RESOURCES FOR THE INDUSTRIAL OPERATIONS OF

ISRAEL
Management Information
Management Information is all about deriving information from a Bank's other activities.
Financial Services companies are heavily regulated.
Government Tax Authorities gather information on customer tax withheld.
Government Security Services gather information on Suspected Terrorists, Money Laundering
and Fraud.
Central Bank and Financial Services Regulators gather information on credit exposures,
capital adequacy and liquidity.
Legal aspects and barriers in Israeli Banking Industry
124
1. Limited Access to Credit Scoring and History

In contrast to traditional market settings where consumers are valued based on their willingness
to pay for a given product, retail banking typically requires extensive information to assess a
consumers ability to repay debt.
2.Limited Access to Payment Card Networks:
One important feature of banking competition that has evolved over the past two decades is
competition between credit card networks. Credit card networks serve both banks and
cardholders by enabling a cardholder to make purchases against either credit or funds the
cardholder holds at the card-issuing institution.
3. Prohibitive Regulatory Oversight:

Because the financial well-being of banking institutions contributes considerably to a countrys
financial stability, banks require oversight. Such oversight affects the strategies, effectiveness,
and level of competition among banks subject to regulation.
4. Limits on Non-bank Consumer Loans
The Regulation of Non-Bank Loans Law, 5753-1993, which was revised in 2007 to cover loans
of up to NIS 1 million, was initiated to protect consumers from exploitation by non-bank lenders.
The law was intended to address certain black market lenders that reportedly offered loans at
annual interest rates exceeding 100 percent. It requires minimal disclosure of the name of the
lender, annual interest rate, repayment schedule, and other relevant information.
5. New Accounting Standards:

The impending implementation of IFRS in 2011 will have a significant impact for the banking
sector particularly in the area of treatment of taxes. The core group of the ministry of corporate
affairs extended the deadline for banks and NBFCs to April 2013 at a recent meeting held on
March 29, 2010.
6. Risk Management:
125
Banks in India are also moving from the individual silo system to an enterprise wide risk
management system. Banks would be required to allocate significant resources towards this
objective over the next few years.
8.7 OVERALL PRODUCTS/SERVICES OFFERED BY THE BANKING INDUSTRY OF

INDIA
Credit Card
Credit Card is post paid or pay later card that draws from a credit line-money made available
by the card issuer (bank) and gives one a grace period to pay. If the amount is not paid full by the
end of the period, one is charged interest.
Debit Cards
Debit Card is a prepaid or pay now card with some stored value. Debit Cards quickly debit
or subtract money from ones savings account, or if one were taking out cash.
Automatic Teller Machine
The introduction of ATMs has given the customers the facility of round the clock banking. The
ATMs are used by banks for making the customers dealing easier. ATM card is a device that
allows customer who has an ATM card to perform routine banking transaction at any time
without interacting with human teller. It provides exchange services
E-Cheques
The e-cheques consists five primary facts. They are the consumers, the merchant, consumers
bank the merchants bank and the e-mint and the clearing process. This cheque system uses the
network services to issue and process payment that emulates real world cheque.
Tele-banking ,Mobile Banking, Internet Banking
Barriers to Indian banking sector
126
Enhanced Customer Experience:

Banks are facing challenges as customers have become demanding and the loyalties are diffused
with low switching costs. High service user charges are also concern.
Asset Quality:
Asset quality in the banking sector is set to be a key issue as Crisil projects net NPA as a
percentage of net Advances to touch 2.3% in FY11, as fallout of the downturn and consequent
restructuring of advances.
Transparency and Supervision:

The disclosure requirements have become stringent over the years and covers Capital adequacy,
Asset quality, Asset liability management, Profitability, Country risk exposure, Risk exposures
in derivatives, Segment reporting and Related Party disclosures.
8.8 PRESENT TRADE WITH QUANTITY AND AMOUNT OF THE BANKS IN INDIA
State Bank of India
Number of Branches: 14,119 branches, including 157 foreign offices in 32 countries
Total Assets (NIS billion): US$360 billion
Share of total banking system deposits: 20
ICICI Bank
Total Assets (NIS billion): US$ 98.99 billion
HDFC Bank
Total Assets (NIS billion): US$ 70.1 billion
Bank of Baroda
127

Total Assets (NIS billion):US$ 83.25 billion
8.9 TECHNOLOGICAL ADVANCEMENT IN INDIA

Satellite Banking-Satellite banking is also an upcoming technological innovation in the Indian
banking industry, which is expected to help in solving the problem of weak terrestrial
communication links in many parts of the country.
Computerization-The process of computerization marked the beginning of all technological
initiatives in the banking industry. Computerization of bank branches had started with
installation of simple computers to automate the functioning of branches, especially at high
traffic branches.
Development of Distribution Channels-The major and upcoming channels of distribution in
the banking industry, besides branches are ATMs, internet banking, mobile and telephone
banking and card based delivery systems.
Automatic Teller Machines-ATMs were introduced to the Indian banking industry in the early
1990s initiated by foreign banks. Most foreign banks and some private sector players suffered
from a serious handicap at that time- lack of a strong branch network.
Introduction of Biometrics-Banks across the country have started the process of setting up
ATMs enabled with biometric technology to tap the potential of rural markets. A large
proportion of the population in such centers does not adopt technology as fast as the urban
centers due to the large scale illiteracy.
Cheque Truncation System (CTS)-Truncation is the process of stopping the movement of the
physical cheque which is to be truncated at some point en-route to the drawee branch and an
128
electronic image of the cheque would be sent to the drawee branch along with the relevant
information like the MICR fields, date of presentation, presenting banks etc.
Electronic Clearing Service-ECS has two variants- ECS debit clearing and ECS credit clearing
service.
Electronic Funds Transfer Systems-launch of the electronic funds transfer mechanisms began
with the Electronic Funds Transfer (EFT) System. The EFT System was operationalised in 1995
covering 15 centers where the Reserve Bank managed the clearing houses
8.10 Comparison of Banking Industry of Israel and India
ISRAEL
Forces of Changes
INDIA
Deregulation,
Technology Technology and Privatization
and Banking Crises are the are
the
most
important
major drivers of changes in drivers of changes in the

Israel.
Major Players
Bank
Tefahot
Indian banking industry.

Leumi,
Bank,
Mizrahi State Bank of India, ICICI

Discount Bank,
Bank
of
Baroda,
Bank, and Bank Hapoalim HDFC Bank and Axis Bank,

are the major players.
etc. are major players.
Services Offered by the Different types of accounts Different types of accounts

Banks
like savings, current and like savings, current, Demat

fixed term accounts; ATM accounts; ATM as well as
facilities,
facilities,
Credit
card credit
card
facilities,
Tele-Banking, Cheques, E-Banking, etc.
Cheques, etc.
Present Trade Volume (in Bank Hapoalim-273.3
SBI Bank-360
mode of total assets) (In Bank Mizrahi-86.3
ICICI Bank-98.99
NIS million for Israel and Discount Bank-154.8
HDFC Bank-70.17
129
in US$ billion for India)
Bank Leumi-272.8
BOB-83.25
Technological
In case of Israel due to In
Advancement
technology various services proportion
case
like ATM, mobile banking, banking
of
India
of
larger
growth
industry
can
of
be
etc. have emerged but still credited to the technological

the people are not much advancement.
All
the
convenient with the new facilities via technology like

technology usage except for ATM, credit card; E-banking,
the ATM facilities.
etc.
have
been
widely
accepted in India.
Barriers
Some of the barriers in Some of the barriers in

banking industry of Israel Indian banking industry are:
are:
Licensing
most
requirements
for
Limited
Narrow
credit
choice
of
Enhanced
customer
experience
customers
require
financial products
more better services
Lack
in order to be loyal as
of
necessary
the switching costs
production assets
in
industry
allocation
important
order to excel in the
accepting deposits
Asset Quality - is the
Limited
access
are low
to
credit card networks
Transparency
&
Supervision
stringent
measures
are taken to ensure it

Requirements of Resources
Resources in case of Israeli Demand drivers in Indian

banking system is obtained banking
from
different
130
sector
channels, Technology,
are
the
Household
Customer relationship model, savings

Management
and
market
Information dynamics.
system, Govt. tax authorities,

regulatory bodies, etc.
TABLE 8.2
8.11 INDIA OPPORTUNITIES AND CHALLENGES IN ISRAEL BANKING INDUSTRY
Management of Risks
The growing competition increases the competitiveness among banks. But, existing
global banking scenario is seriously posing threats for Indian banking industry.
According to Shrieves (1992), there is a positive association between changes in risk and
capital. Research studied the large sample of banks and results reveal that regulation was
partially effective during the period covered. Moreover, it was concluded that changes in
bank capital over the period studied was risk-based.Wolgast, (2001) studied the Merger
and acquisition activity among financial firms.
The authorfocused bank supervisors in context with success of mergers, risk

management, financial systemstability and market liquidity. The study concluded that
large institutions are able to maintain asuperior level of risk management.Al-Tamimi and
Al-Mazrooei (2007) examined the risk management practices and techniques indealing
with different types of risk. Moreover, they compared risk management practices
betweenthe two sets of banks. The study found the three most important types of risk i.e.
commercial banks foreign exchange risk, followed by credit risk, and operating risk.
Sensarma and Jayadev (2009) used selected accounting ratios as risk management
variables and attempted to gauge the overall risk management capability of banks. They
used multivariate statistical techniques to summarize these accounting ratios. Moreover,
the paper also analyzed the impact of these risk management scores on stock returns
through regression analysis. Researchers found that Indian banks' risk management
capabilities have been improving overtime. Returns on the banks' stocks appeared to be
131
sensitive to risk management capability of banks. The study suggest that banks want to
enhance shareholder wealth will have to focus on successfully managing various risks.
Growth of Banking
Zhao, Casu and Ferrari (2008) used a balanced panel data set covering the period of
1992-2004 and employing a Data Envelopment Analysis (DEA)-based Malmquist Total
Factor Productivity (TFP) index. The empirical study indicated that, after an initial
adjustment phase, the Indian banking industry experienced sustained productivity growth,
which was driven mainly by technological progress.
Banks' ownership structure does not seem to matter as much as increased competition in
TFP growth. Foreign banks appear to have acted as technological innovators when
competition increased, which added to the competitive pressure in the banking market.
Finally, our results also indicate an increase in risk-taking behavior, along with the whole
deregulation process.
It was found in the study of Goyal and Joshi (2011a) that small and local banks face
difficulty in bearing the impact of global economy therefore, they need support and it is
one of the reasons for merger. Some private banks used mergers as a strategic tool for
expanding their horizons. There is huge potential in rural markets of India, which is not
yet explored by the major banks.
Human Resource Management

Gelade and Ivery (2003) examined relationships between human resource management
(HRM), work climate, and organizational performance in the branch network of a retail
bank. Significant correlations were found between work climate, human resource
practices, and business performance.
The results showed that the correlations between climate and performance cannot be
explained by their common dependence on HRM factors, and that the data are consistent
132
with a mediation model in which the effects of HRM practices on business performance
are partially mediated by work climate Bartel (2004) studied the relationship between
human resource management and establishment performance of employees on the
manufacturing sector.
Using a unique longitudinal dataset collected through site visits to branch operations of a
large bank, the author extends his research to the service sector. Because branch
managers had considerable discretion in managing their operations and employees, the
HRM environment could vary across branches. Site visits provided specific examples of
managerial practices that affected branch performance.
An analysis of responses to the banks employee attitude survey that controls for
unobserved branch and manager characteristics shows a positive relationship between
branch performance and employees satisfaction with the quality of performance
evaluation, feedback, and recognition at the branchthe incentives dimension of a
high-performance work system. In some fixed effects specifications, satisfaction with the
quality of communications at the branch was also important.
Global Banking
It is practically and fundamentally impossible for any nation to exclude itself from world
economy. Therefore, for sustainable development, one has to adopt integration process in
the form of liberalization and globalization as India spread the red carpet for foreign
firms in 1991. The impact of globalization becomes challenges for the domestic
enterprises as they are bound to compete with global players.
In the Indian Banking Industry, one can find that there are 36 foreign banks operating in
India, which becomes a major challenge for Nationalized and private sector banks. These
foreign banks are large in size, technically advanced and having presence in global
market, which gives more and better options and services to Indian traders.
Financial Inclusion
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Financial inclusion has become a necessity in todays business environment. Whatever is

produced by business houses, that has to be under the check from various perspectives
like environmental concerns, corporate governance, social and ethical issues. Apart from
it to bridge the gap between rich and poor, the poor people of the country should be given
proper attention to improve their economic condition.
Dev (2006) stated that financial inclusion is significant from the point of view of living
conditions of poor people, farmers, rural non-farm enterprises and other vulnerable
groups, financial inclusion, in terms of access to credit from formal institutions to various
social groups. Apart from formal banking institutions, which should look at inclusion
both as a business and social responsibility, the author conclude that role of the self-help
group movement and microfinance institutions is important to improve financial
inclusion.
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CHAPTER 9
IT Industry of Israel
135
9.1 INTRODUCTION
After studying the EXIM Policies of Israel, now we have focused on the information technology
sector of Israel. Various aspects of Indian and Israeli IT industry have been studied and
compared in order to understand where these countries stand and how they can help each other
grow and perform by sharing trade and land.
Talking about the IT sector, it is clear that this sector is one of the most booming sector as it is
most requires in almost every field from agriculture to technology sector. Information
technology essentially refers to the digital processing, storage and communication of information
of all kinds. Therefore, IT can potentially be used in every sector of the economy. The true
impact of IT on growth and productivity continues to be a matter of debate. When we talk about
Indian IT sector, contribution of IT sector was 63 billion out of 9170 billion. But now the
scenario is different as in 2000-01 it is 554 billion out of 19895 billion. Thus, it can be said that
Indian IT sector is on boom. The focus has been given to the software and hardware companies
in India. The main challenge in this growth of IT sector in India was that the components for the
making of the hardware products were not available so it had to import it from East and Southern
Asia. But, now India has started focusing on the development of the software for financial
services.
Now, talking about the Israels IT industry, its companies are considered as one of fastest
growing software companies of 2010. At the turn of the new millennium, Israel boasts many
thousands of high technology companies in a wide range of fields such as telecommunications
equipment, software, semiconductors, biotechnology and medical electronics. Israel invests 2.2%
of its gross domestic product in R&D (the third highest level in the world, after Japan and
Sweden and on a par with Germany). There are currently some 100 Israeli companies trading in
the U.S., mainly on the NASDAQ market, representing the second-largest number of foreign
firms appearing on the U.S. stock markets (after Canada). Some 80% of these companies
develop and manufacture advanced technological products.
Israeli and Indian industry associations signed a memorandum of understating aimed at spurring
cross-border innovation and entrepreneurship, as the two countries add high technology to their
growing network of trade and economic cooperation.
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Since the diplomatic relations were first established in 1992, a legal framework for trade and
economic cooperation was put in place by way of agreements between the two governments.
Important agreements are according Most Favored Nation status (12/94), Avoidance of Double
Taxation (1/96), Bilateral Investment Protection (1/96), Customs Cooperation (1/96), Joint
Industrial R&D (12/96) and setting up of Agricultural Demonstration Farm.
These agreements are enforced by MOUs signed between economic organizations of the two
countries. In the field of Information technology, The Electronic & Computer Software Council
of India (ESC) and the Electronic Industries Association of Israel signed an MOU, National
Association of Software & Service Companies (NASSCOM) signed an agreement for closer
cooperation with their counterparts Israeli Association of Software Houses (IASH) to exploit the
competitive advantages the two countries hold in the fast growing field. Another MOU was
signed last year between the EXIM Bank and the Israel Export Institute.
Thus, India and Israel have many tie ups. They trade many products. Much of the trade until now
has been focused on defense, where increased arms spending has created a natural market for
Israel military technology like unmanned pilotless vehicles (UPVs) and early airborne radar
systems.
India and Israel both are not involved in the starting step of mining diamonds, these countries are
involved in evaluating, cutting and selling. When we talk about India the city named Surat is
considered as one of the Diamond hubs, while in Israel Tel Aviv is considered to have been
involved in the same.
The trade of technological and IT products among these two countries has just started. But there
will likely be more than sales. Companies will benefit mostly from combining Israeli innovation
with Indias vast low-cost manpower. Andhra Pradesh state of India is already considered as a
high tech powerhouse, with software exports last year of $8 billion, equal to half the states total.
But Ajay Misra, principal secretary to the states Information Technology and Communication
Department, said India had ambitions to expand out of software into computer and
telecommunications hardware in which Israeli innovation could help as contribution of Israel in
technological advancement is more as compared to that of India. Apart from this dream of
expanding into telecommunication hardware, many Indian companies already enjoy the support
137
of Israeli technology. Tejas Networks based in Banglore, India now uses the Ethos team which is
based in Israel, as an Israeli R&D center.
Its not always that only India gets the benefit of Israeli innovation but it also accepted by the
Israeli investors that India also benefits Israel through these tie ups. Steven Katz, a principal at
the Israeli high technology investor, Vertex Venture Capital, said Israeli companies could also
benefit from closer ties with India. But he made sure that the power of creativity remains with
Israel.
Talking about India-Israel cooperation in science and technology, it has evolved on two tracks.
The first covers joint research by S & T Institutions under S & T Cooperation Agreement signed
in 1993. The second covers industrial R&D under an MOU on Industrial Research and
Development Initiative (IIRD) signed in 2005 between Department of Science & Technology,
India and Ministry of Industry, Trade & Labor, Israel to promote bilateral industrial R & D and
specific projects. Under this MOU India and Israel set up a joint industrial R & D fund, i4RD to
encourage investment and joint ventures.
Fund for starting offices in India: The Israeli Ministry of Trade, Industry and Labor and Ministry
of Finance announced a funding program to increase trade with India and China, by allocating
NIS100 million (around US$ 28 million), spread over a period of three years. Companies which
would like to increase their business with India or China can get up to NIS 700,000 (around US$
200,000) over three years to cover expenses including relocation of employees to India; hiring a
local consultant; and expenses for opening an office in the target country. Not only Israeli but
also many of the Indian companies started their operations in Israel. TCS one of the major IT
companies of India, opened a branch in Israel in 2005. Israeli leading IT companies such as
Amdocs, Check Point, Ness Technologies and Magic Software are major exporters of software
products. Many Israeli IT companies have established R&D centers in India and / or have
subsidiaries there to take advantage of highly skilled personnel and lower costs (Check Point,
Amdocs, Magic Software, Ness Technologies etc).
Apart from the tie ups in the field of technology and telecommunication, India and Israel have
also signed many joint ventures in the sectors like agriculture, software and medical equipments.
138
In terms of exports and imports, in 2010, India stood at the sixth place in terms of Israels trade
partner countries and the third largest trade partner in Asia after China and Hong Kong (trade
data includes diamonds) and remained a focus country of the Israeli Government for increased
trade effort. In 2010, India was ranked 9th largest import source of Israel including diamonds,
and 14th largest import source excluding diamonds. In addition, India was ranked 4th largest
export destination of Israel (including diamonds) and 5th when excluding diamonds (in Jan-Dec
2010). While Indias exports to Israel in areas other than diamonds have increased over the
years, Diamonds still constituted around 49% of the bilateral trade in the year 2010.
Major exports from India to Israel include precious stones and metals, chemical products, textile
and textile articles, plants and vegetable products, mineral products, rubber and plastic products,
base metals and machinery. Major exports from Israel to India include precious stones and
metals, chemical and mineral products, base metals, machinery, and transport equipment.
Focusing on Gujarat and Israel relationships it can be seen that they have just begun the trade.
Gujarat;s CM Mr. Narendra Modi invited Israeli ambassador Alon Ushpiz and many other
investors in Gujarats most successful corporate summit Vibrant Gujarat Agro Tech Global Fair
in 2014.
Currently, Gujarat already has an Israeli company Netafim Irrigation India Pvt Ltd based in
Vadodara, engaged in smart drip and micro-irrigation solutions amongst other agro-technologies.
Recently, another Israeli company- Teva Pharmaceuticals forayed into Gujarat.
Referring to the Israels success in agriculture with minimum usage of water the Chief Minister
expressed desire to arrange a tour of Gujarat MLAs to visit Israel for studying its agro
technology and water management programmes.
The Chief Minister invited the partnership of Israel government and Israeli companies in the
state governments plan to develop economic models of water management and water recycling
in around 50 cities of Gujarat. He also talked about the possibilities of partnership in the
development of defense manufacturing sector.
Recent trends have shown that Israels engagement with Gujarat have deepened manifold with
The Israel Ports Company (Hani) recently winning a tender for the establishment of two ports in
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Gujarat at a total cost of $1 billion. Also, Israeli pharmaceutical major TEVA has decided to
establish a factory in Sanand city at an estimated preliminary investment of $45 million.
The TEVA factory will produce medicines that can be sold without prescriptions (OTC) and are
meant for the Indian market, not exports.
Although it is seen that India and Israel share a good trade relation, israels major agreements are
considered with E.U, U.S.A & EFTA. Israeli government provides financial aid, good
geographic location and some tax and custom benefits (in accordance with NAFTA agreements)
to the foreign investors. Thus, IT industry in Israel is a sector which gets government support for
development. And the law does not restrict the flow of trade in this industry as it is the one which
is considered as the strength of Israel and which provides growth to Israel.
When we look forward to the growth opportunities for both India and Israel, it has to be made
sure that the countries are capable of taking good decisions. \
Israel, in comparison, is a much wealthier society with barely half of Bangalore's population, so
it should logically focus on developing products than providing manpower-intensive services,
and that is what it has done.
To be sure, Indian companies and the Indian branches of international firms have been doing
more high-end work in recent years and helping to develop cutting-edge technologies useful for a
range of industries. But for every product development claim that you can make on behalf of
India, Israel can perhaps make a matching if not superior claim.
In some ways, this comparison is unfair to India because it is being made in the area where Israel
has been strong, and not where India's companies shine. It is also true that Israeli entrepreneurs
and companies do not seem to be able to work on the massive scale (employee strength
approaching 100,000, for instance) that Indian companies have mastered.
So each country's IT industry has its own strengths. But when you wander further afield, into
bio-tech and other high-tech areas, there is no question about which country is achieving more,
and which country should be modest about the claims it makes.
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Israel has firmly established itself as the most computerized country in the Middle East; it even
surpasses some Western European nations.
Israel also leads the Middle East with the highest penetration rate of PCs in private homes. There
is a personal computer in nearly one out of two households, a ratio similar to that of the United
States, Canada and a very few European and Far Eastern countries.
Compared to other so-called high-tech 'tigers', such as Korea, Malaysia and Taiwan, Israel is
unique in that it is a "true" high-tech country, with a highly developed domestic market for
computing and telecommunications. Israel is also a "quick adopter" of advanced technologies.
However, the high-tech industry needs to broaden its focus on R&D to include marketing, in
order to capture a larger market share. Today, some start-ups develop valuable technologies, only
to discover that their target market is not aware of them. Most start-ups in Israel boast annual
sales of a few million dollars; only a handful of Israeli companies have achieved annual sales of
hundreds of millions of dollars; and not one Israeli company is positioned among the worldwide
leaders that sell high-tech products in the billions. By taking the appropriate strategic decisions,
the Israel high-tech industry can enjoy the high profitability.
In terms of growth of both the countries, Israel is growing through innovation and India is also
growing and one of the factors contributing to its growth is technology. Every time there was a
revolution, mankind has benefited. This time we can call it a technological revolution. With
advancements in sectors like telecom, IT, space-research and nuclear technology, India is surely
marching ahead like never before. Entry of wireless services and VoIP has equipped the users
with mobility and coverage in negligible price. India is also making its mark in the field of space
research.
High tech is important to both countries, but their industries are very different. India is focused
on software services -- writing code and operating systems for other companies. The National
Association of Software & Services Cos (NASSCOM) forecasts will post exports of as much as
$70 billion in the year to March 2012. The Israeli industry is much smaller but more diverse, and
focuses on developing cutting-edge software, telecommunications and medicine. Exports in 2010
were about $29 billion. Theres a complementary software story. Indian firms are entirely
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process orientated and Israel firms are much more about product which help them fulfil one
anothers requirement.
Apart from this, India has a huge to show its strength in fulfilling future needs and demands of
electricity. It already has a huge demand of power supply and by 2020 the existing demand is
likely to double. Per Capita electricity consumption seems to grow manifold and India had to
look for other energy sources for generation of electricity. Nuclear technology came to its rescue.
India has knowledge of fast reactors and Thorium fuel cycle which will take it to one of the
leaders positions in nuclear technology. Internet services and devices industry has potential to
increase its contribution to up to $100 billion (about Rs. 5.5 lakh crore) to India's GDP and
generate about 2.2 crore jobs by 2015.
The investment is also very high for both the countries but mainly for Israel. In recent years,
Israel has become a magnet for foreign investors. The list of those who have taken advantage of
Israel's uniquely skilled, and highly educated workforce and cutting-edge R&D capabilities by
establishing R&D centres, subsidiaries, and production lines include top international companies
like Intel, Microsoft, Motorola, Google, Applied Materials, HP, Deutsche Telekom, and
Samsung among others. Even Apple has recently announced its intention to open its first
overseas R&D centre in Israel.
Although Israel itself is a high tech field of research and development, it is dependent on the US
to some extent as the latter provides it with financial aid. However many Israeli investors believe
that US goes on increasing the amount of aid in order to keep Israel a dependent country. They
say that US has provided 30 billion aid to the nation but Israel has provided the services of 100
billion to US. Thus, US owe the amount of 70 billion to Israel.
While America is investing in Israel in the form of financial aid, Israel took advantage of the
American political and economic pressure on many countries. US used to request from whoever
wants to improve its relations with it to normalize its political and economic relations first with
Israel. This led many countries to realize that the prelude to the American satisfaction is through
Israel, and that establishing economic relations with Israel would thus be within a pragmatic
approach to their own interests.
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When the focus is driven to the various factors affecting IT industry in India & Israel, many
loopholes come out. In the absence of these loopholes different heights could have been touched
by these nations.
9.2 POLITICAL FACTORS
For IT industry the Indian political structure is stable, but there are fears of hung parliament due
to a lack of clear majority in parliament creating fear of wrong investing in the minds of
investor thereby reducing capital. Indian government has decided to contract IT job to Indian IT
companies creating more opportunities for the company and the industry at large.
9.3 ECONOMIC FACTORS
These includes factors affecting IT industry ranging from rising working pay, global recession,
competition, contract availability and fee. Domestic IT spending grew by20% and reached $20
billion in 2009. Currency fluctuations caused by the devaluation of the dollar has affected the
industry during the last global recession. Real estate prices decline resulted in rental expenditure
forcing customer to leave luxuries goods such as electronic and computers that need software to
work. Recession cause low attribute rate due to job layouts and job cuts. India economic
attraction has helped in convincing investors due to low cost advantage. There is a lot of
economic attraction towards IT sector due to low cost advantage and other factors. India, with
its low cost advantage and emergence of several private players, represents the fastest
growing market.
9.4 SOCIAL FACTORS
These are social factors affecting IT industry which ranges from employee right, language
barriers, race nationality of company or other issues.
India is one of the few countries to have an increasing share of working population, since there is
great availability of both skilled and unskilled labour force. Great number of institute and
universities offer IT course creating room for availability of IT professional at lower cost since
there is job competition.
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Another social factor that affects is: Global warming. Should Industry be concern with the issue
of global warming? Yes it is affected by many government laws regarding it like in china &
India, where company with great amount of carbon emission are charge great amount of tax.
Likewise being a major player in the global IT market Infosys has introduces measure to help in
the reduction of carbon emission by trying to reduce its water consumption, electricity
utilization, carbon emission and partnering with other companies in troubleshooting this global
dilemma.
9.5 TECHNOLOGY FACTOR
SOA
has
benefited
enterprises
with
benefits
such
as
standardized
patterns,
interoperability, centralized governance, easy integration etc. Almost all industry domains have
benefited from SOA strategy in order to build more flexible and malleable IT architecture
involve in pre-usable services.
9.6 LEGAL FACTORS
Technology was a revolutionary step for humanity, but it also created a significant need for the
regulation and governance of these activities, a requirement that lead to the creation
and implementation of cyber laws across the globe. India became the 12th nation in the world to
adopt a cyber law during 2000. From the perspective of e-commerce in India, the IT Act 2000
and its provisions contain many positive aspects.
Depreciation on computers and computer software at 60 percent as per the provisions of the IT
Act, annual depreciation on computers and computer software can be claimed at the rate of 60
percent of written down value at the beginning of the relevant financial year for income tax
purposes. Therefore, under the written down value method, 84 percent of cost of computers and
software can be depreciated in first 2 years. Companies operating in software technology park
(STPI) Scheme got tax benefit till 2010.
9.7 ENVIRONMENTAL FACTORS
Environmental conservation and protection is an issue which has gained prominence because of
deteriorating environmental balance which is threatening the sustainability of life and nature.
Largely, business is also held responsible for such situations as emissions from industries
144
polluting the air, excessive chemical effluents drained out in water making it poisonous and unfit
for use, usage of bio non-degradable resources affecting the bio-chain adversely and exposure of
employees to hazardous radiations bring their life in danger. All these have been taken very
seriously by different stakeholders in the society including the government and legislations and
movements are creating pressure for an environment friendly business.
As a part of case studies various companies have been studied. Two IT companies of each nation
have been taken in order to compare and analyze them in terms of various parameters. The
Israeli companies that are taken are: Checkpoint Software Technology Ltd. And Click software,
while the Indian companies are: Western India Palm Refined Oils (WIPRO) and Tata
Consultancy Services (TCS).
Checkpoint Software Technology Ltd. And Click software are the major software companies of
Israel. Check Point Software Technologies is the global head in securing the Internet.
Established in 1993, by Chairman and CEO Gil Shwed, Check Point first pioneered the I.T.
security industry with FireWall-1 and its original Stateful examination tools, which is unmoving
the basis for most complex defence machinery today, while ClickSoftware is a proven leader in
automated mobile workforce management and service optimization solutions for the enterprise,
available on the cloud or on ground.
WIPRO Ltd. acronym for Western India Palm Refined Oil, started its voyage in 1947 as a
vegetable oil trading company in Amalner, Maharashtra, India. It was founded by M. H. Premji,
father of its current Chairman Azim Premji. One wonders how it entered the field of software
and computers from all together a different field of oil refinement. Well, in 1977, after IBM left
Indian IT sector, Wipro capturing the on time entered the sector of computers.
Tata Consultancy Services Limited, also known as TCS is an Indian IT company of TATA
Group. It performs its operations in multiple countries. It mainly provides business solutions and
outsourcing services.
Checkpoint was established after both the Indian companies we have analyzed i.e., TCS and
Wipro but still both of them are providing specific products related to mobile technology skills
and competencies, but on the same hand it can be seen checkpoint is providing the customized
products, which plays a very important role in Checkpoint.
145
All the companies are now in IT Industry but all of them are having different initiators and now
working on more or less same path, as it can be seen WIPRO has started with making Personal
Computers, TCS with ODC and R&D Centers, whereas checkpoint Started with Fire Wall 1
The focus of all the companies were on Customer Satisfaction but for the same goal all have
different product offerings, like WIPRO offers network solutions, environment Friendly products
etc, TCS gives Business solutions, Outsourcing Services, etc whereas Checkpoint focuses
completely on customized products
Taking into consideration of both Israeli companies it can be seen that both the companies were
having a long experience into the industry, and both being leader into specific fields namely,
Clicksoftware in Field Service Management and Checkpoint in providing Customized products.
The main focus of Clicksoftware is Innovation while of Checkpoint is customer needs, the main
essence of the products being offered also differs, as in click it was totally research result and in
checkpoint it provides 3D security.
Now at last seeing both the Indian Companies, it can be said there is a huge gap between the
establishment of WIPRO and TCS of around 20 years then also TCS goes by hand in hand with
WIPRO this is only because of various strategies being followed by the TCS.
9.8 OPPURTUNITIES
The Israeli IT sector grew over this six-year period by a factor of nine, whereas GDP
slightly more than doubled in the same period.
In India profitably manufacturing semiconductors and other sophisticated hardware

components typically requires infrastructure, large-scale investments in capacity, and
accumulated experience which it does not possess. Thus, India benefit from trade deals
with Israel.
Nevertheless, India does perform many hardware assembly tasks internally, almost
entirely for the domestic market. Despite the even faster growth of software exports,
domestic software revenue still represents about 30% of software industry gross receipts.
146
The National Association of Software and Services Companies (NASSCOM) of India

projects domestic sales to grow substantially faster than export sales in the next decade,
enough to make domestic sales over 50% of the industrys sales, and this seems to borne
out by recent growth in domestic software (31% annual growth from 1998-99 to 2000-01,
NASSCOM, 2002a, b), and IT overall (42% growth in 1999-00).
One of the researcher suggests that the difference in the patterns of domestic and export
sales in India is overstated, because domestic sales of packages are by resellers of
packaged software licensed from foreign software vendors. However, this appears to be
changing, as Indian firms develop packages for the home market in areas such as
financial services.
Israels software companies mainly focus on the data protection and security software.
Israeli and Indian industry associations signed a memorandum of understating aimed at

spurring cross-border innovation and entrepreneurship, as the two countries add high
technology to their growing network of trade and economic cooperation.
The two countries are negotiating a free-trade-area agreement (FTA) that will remove
barriers to trade. Much of the trade among India & Israel until now has been focused on
defense. For IT industry the Indian political structure is stable India economic attraction
has helped in convincing investors due to low cost advantage.
When Indian clients industry faced with reduction of work force due to job layoffs and
unsuitable balance sheet most companies have decided not to make much expenditure in
purchase, but make optimum use of existing facilities to make profits.
The decline of banking and financial sectors, the revenue from there is expected to
decline, hurting the bottom line of IT majors.
147
Almost every sector in India is facing high rates of attrition these days. Though the
IT/ITES sector is booming, it is constantly facing high attrition rates of 25% - 30%.
Infosys has introduces measure to help in the reduction of carbon emission by trying to
reduce its water consumption, electricity utilization, carbon emission and partnering with
other companies in troubleshooting this global dilemma.
Almost all industry domains have benefited from SOA strategy in order to build more
flexible and malleable IT architecture involving-usable services.
CAD is the main geometry authoring tool within the Product Life cycle Management
process and involves both software and sometimes special-purpose hardware. Setting up
of the Software Technology Parks of India (STPI), by the Ministry of Information
Technology, Government of India and the International Technology Park in a joint
project by the State Government, the TATA Group and the Singapore Consortium to
promote and facilitate the software exports is another major step towards the growth
of Indian Information Technology Sector.
India is a perfect solution for all those companies which seek for cheap, yet technically
skilled labor who have innovative minds and state of art to work over a project.
The companies selected for IT industry, among them Indian companies have more
experience in know-how as compared to Israel. Israel companies are basically innovation
oriented while Indian companies are not much developed in innovation as compared to
Israel.
Israeli companies to outsource or set up manufacturing in India because of Indian

requirements of Israel military technology like unmanned pilotless vehicles (UPVs) and
early airborne radar systems.
India has achieved a lot in software and service sector but in hardware there is lot scope
of achievement and Israel innovation could help in this matter.
148
Steven Katz, the Israeli high technology investor, said Israeli companies could also
benefit from closer ties with India. But, he cautioned, managers will have to be careful
about when and how they do it. Once the company get to a certain size and build a new
software module and need 20 engineers, thats when can perform the development in
India. But the creativity and ingenuity should stay in Israel.
India-Israel cooperation in science and technology has evolved on two tracks. The first
covers joint research by S & T Institutions under S & T Cooperation Agreement signed in
1993 and the second covers industrial R&D under an MOU on (IIRD) signed on May 30,
2005.
Israel to promote bilateral industrial R & D and specific projects. Under this MOU India
and Israel set up a joint industrial R & D fund, i4RD to encourage investment and joint
ventures.
Companies which would like to increase their business with India can get up to NIS
700,000 (around US$ 200,000) over three years to cover expenses including relocation of
employees to India; hiring a local consultant; and expenses for opening an office in the
target country.
Many Israeli IT companies have established R&D centers in India and / or have
subsidiaries there to take advantage of highly skilled personnel and lower costs (Check
Point, Amdocs, Magic Software, Ness Technologies etc).
To strengthen trade ties with Israel, a delegation from Gujarat has asked the business
community here to partner with the State, pitching it as an investment-friendly
destination.
The combination of the technological capabilities in Israel, alongside the huge potential
of the industry in Gujarat, will lead to significant growth in both markets.
149
The combination of strategic geographic location, skilled manpower, multi-language

speakers, and the local Authority which placed the economic growth and development at
the top of its list of priorities, makes Gujarat an attractive market for the Israeli
companies,
Recent trends have shown that Israels engagement with Gujarat have deepened manifold
with The Israel Ports Company (Hani) recently winning a tender for the establishment of
two ports in Gujarat at a total cost of $1 billion.
There are three basic principles that one must abide by to become an ITA participant:
o all products listed in the Declaration must be covered,
o all must be reduced to a zero tariff level, and
o all other duties and charges (ODCs) must be bound at zero.
Ministerial Declaration stipulated that participants representing approximately 90 percent

of world trade would have to notify their acceptance of the ITA by 1 April 1997.
In July, The International Centre for Entrepreneurship and Technology (ICREATE) of

Gujarat had signed a MoU with Technion, Israel, to encourage and create the ecosystem
of innovation, technology and entrepreneurship.
Checkpoint was established after both the Indian companies we have analyzed i.e., TCS
and Wipro but still both of them are providing specific products related to mobile
technology skills and competencies, but on the same hand it can be seen checkpoint is
providing the customized products, which plays a very important role in Checkpoint.
All the companies are now in IT Industry but all of them are having different initiators
and now working on more or less same path, as it can be seen WIPRO has started with
making Personal Computers, TCS with ODC and R&D Centers, whereas checkpoint
Started with Fire Wall 1
150
The focus of all the companies were on Customer Satisfaction but for the same goal all
have different product offerings, like WIPRO offers network solutions, environment
Friendly products etc, TCS gives Business solutions, Outsourcing Services, etc whereas
Checkpoint focuses completely on customized products
Taking into consideration of both Israeli companies it can be seen that both the
companies were having a long experience into the industry, and both being leader into
specific fields namely, Clicksoftware in Field Service Management and Checkpoint in
providing Customized products.
The main focus of Clicksoftware is Innovation while of Checkpoint is customer needs,

the main essence of the products being offered also differs, as in click it was totally
research result and in checkpoint it provides 3D security.
Now at last seeing both the Indian Companies, it can be said there is a huge gap between
the establishment of WIPRO and TCS of around 20 years then also TCS goes by hand in
hand with WIPRO this is only because of various strategies being followed by the TCS.
151
CHAPTER 10
Power & Energy Industry of Israel
152
10.1 INTRODUCTION
As far as Power and Energy Industry of Israel is concerned recent discoveries of natural gas at
leviathan basin has changed outlook of Israels economic position. Israel has been mostly
dependent on imports for energy and power generation, even though it has indigenous energy
resources such as; natural gas, oil, non-exploited oil shale etc. and renewable resources with
superior technology, these resources are not sufficient enough to meet the demand the population
of 7.7 5million.
In energy consumption non-renewable sources dominates as Israel consumes49% of energy from
oil,35% from coal, 11% from gas and5% from renewable energy only 5%, while in power
generation non-renewable resources dominate too as 63% of electricity is generated from coal,
26% is from natural gas, 11% is from oil and less than 0.5% from renewable sources. Currently
Israel imports all of its coal and most of the oil supplies for power and energy generations but the
recent major discoveries of natural gas in coastline of Mediterranean Sea at leviathan basin are
going to change the picture of Israels energy sector and whole economy.
From the authenticated published geological information and commercial data, Levant Basin
which is situated from Jordan River to Turkey and out to sea towards Cyprus contains 1.7 billion
barrel of shale oil and 120 trillion cubic feet natural gas which is sufficient enough to meet
domestic demand for at least 150 years! Thanks to these discoveries, Israel can now become
capable of providing for a substantial amount of its energy consumption without depending on
imports.
By government support and encouragement Ministry of Energy and Water Resources, large
industrial factories and power plants are lead to be converted in natural gas use, and for the
establishment of this proposal a nation-wide conduction and distribution system has commenced.
This system is designed such thatalmost every factory in Israel will be provided with natural gas.
Power sector will also be enhanced by using natural gas in power generation.
Even though Israel governments plan aims at diversification through an enhanced move towards
gas, renewable energy resources have always been a key element of Israels energy policy as
improving energy efficiency and increasing use of renewable energy sources will never be
153
sacrificed in any sector whether it is agriculture, industrial or power and this element puts Israel
amongst the top in the list of technological advanced countries.
Recent discovery of vast amount of natural gas would change total scenario of oil production,
while earlier Israels average oil production has not crossed 55 billion cubic feet. This discovery
would benefit the country more than anyone can imagine as latter the discovery the stocks of the
energy sector is going upwards rapidly and the moment it would start exporting country would
flourish with huge amount of profits, though the discovery has also led the neighbor countries in
disputes with Israel as it would create threat to the oil-rich middle east countries. But importantly
the growth rate of Israel is definitely going higher.
Power and Energy sector of Israel consists mainly two sectors i.e. oil and gas sector and power
sector. Leading players includes Delek, Paz, Oil Refineries Ltd etc. these local players have
substantial amount of market shares. Besides domestic companies, there are several other foreign
companies having share in Energy sector of Israel like Noble Energy, Siemens, Ratio oil etc. In
power sector IEC (Israel Electric Corporation) is a leader in providing electricity which owns
most of the power stations in Israel.
Oil and Gas Sector in Israel

Israels energy sector is undergoing seismic changes. Discoveries of significant natural gas fields
in the Mediterranean Sea just off Israeli shores have generated hope of energy independence for
the first time in history. Additional recent, discoveries raise the prospect of Israel becoming a net
energy exporter.
Israel was unprepared for the breadth of these discoveries and has rapidly been working to
establish a regulatory framework that would support resource development in a responsible and
sustainable manner. The country is actively seeking out partners to assist in achieving these
goals, presenting an increasingly attractive business environment. Yet to leverage the
opportunities expected to arise over the next five to 10 years, international companies would
benefit from a deeper understanding of the interests and concerns affecting the development of
Israels natural gas market.
154
Gas Exploration Activities in Israel

In 1954, Israel found its first onshore gas well later in 1955 the first big onshore discovery in
Heletz oil field is made. In 1999, first offshore discovery of Israel was made in Noa gas field.
Exploration activity increased drastically after the discovery of the giant Tamar, Dalit and
Leviathan fields in 2009-2010. Until now, more than 500 exploration and production wells have
been drilled, 50 of them offshore32 offshore licenses and 4 offshore leases are valid at present.
Open offshore area which is not covered by current petroleum rights is closed for exploration
and production, new licenses will not be granted offshore in the near future.
The exploration and production of gas deposits in Israel are conducted by private corporations,
both Israeli and international. The directives and regulations with respect to said activity are
prescribed in the Oil Law, 1952 (hereinafter - the Oil Law). The Oil Law determines that no
person is to explore for natural gas other than under a preliminary permit, under a license or
under a lease deed.
Development of Israels natural gas export policy is in construction, major issue is about how to
implement policies that balance the countrys long-term energy security with the need to
establish concrete export quotas demanded by investors. To develop this policy, the Israeli
government mandated the creation of an inter-ministerial committee.
There are no trade tie ups and agreements in the energy sector so far between Israel and India,
though according to Press Trust of India, alternative energy is amongst one of the priority areas
for enhanced collaboration between two countries and during the last year visit to Israel by
External Affairs Minister of India, Minister for National Infrastructure Uzi Landau, who also
holds the Energy & Water Resources portfolio, expressed that Israel will take forward the
interest in the energy sector collaboration. During initial discussions, Israel has indicated its
willingness to give the state-run ONGC Videsh an equity stake, informed sources said.
155
10.2 PESTEL ANALYSIS OF OIL & GAS SECTOR

I.
POLITICAL FACTORS
ISRAEL
INDIA
Though Israel has made huge oil and India already imports over 70 % of its crude
gas discoveries offshore Mediterranean
Sea
but
still
not
major
oil requirements
western India approximately has 26 sedimentary
countries are not interested in investing
basins spread across 3.14 million sq. km
in this sector of the country due the fear
out of which 1.35 million sq. km. is deep
of attack by neighboring countries.
water.
Even though Levant Basin Province is As a part of Liberalization Policy of 1991,

one of the world's richest natural gas
some unexplored and slightly discovered
reserves, it is located between countries
areas
with infinite mutual hatred.
competitive bidding, PSC regime was
It touches the sea borders of Israel,
were
opened
experimented
with
for
international
which
resulted
in
Lebanon, Palestine, the Republic of
pronouncement of New Exploration &
Cyprus and the Turkish Republic of
Licensing Policy(NELP) in 1998.
Northern Cyprus.
Israel is almost in a state of war with
Lebanon. Lebanon has recently made
In India all mineral resources (including oil

&
gas)
are
owned
by
the
central
government.
claims on Israels largest off-shore gas The Government has taken a number of
discovery and are threatening armed
initiatives to promote this sector some of
conflict if the Israelis attempt to
which are stated below
develop what they claim are Lebanese
a) Hydrocarbons Vision 2025
resources.
b) Provision in Twelfth five year plan
Egypt has stopped selling its natural
c) NELP (New Exploration Licensing
gas to Israel as a result of Egypts
Policy)
political unrest. Israel was importing
d) OALP (still in process)
40% of its energy needs from Egypt.
e) Policy
Cyprus is acting as the natural mediator

in this dispute.
for
Changes
in
Price
of
Petroleum Products
f) 100 % FDI in Oil and Gas Sector for
Taxation Policy of Israel is also quite
E&P Activities (50%-PSUs and 100%156
stringent. The initial levy of taxes on
private companies in case of refining)
the companies will stand at 20%, and Main Regulatory Bodies of the sector in
will rise gradually to 50%, depending
India are :
upon amount of excess profits, while
a) Petroleum
rate of royalties will remain at its
Natural
Gas
Regulatory Board
current level of 12.5%.

II.
and
b) Directorate General of Hydrocarbon
ECONOMIC FACTORS
ISRAEL
INDIA
Usually Israel posts sizable amounts of In 2011-12, this sector contributed Rs.
trade deficits, which are covered by
2,32,769 crore to Central and State
tourism, other service exports and
governments revenues by way of various
significant foreign investment inflows.
taxes (20.6% of total indirect taxes)
The global financial crisis of 2008-09 Coal and oil together account for 66% of
brought a brief recession in Israel, but
the energy consumption of India
the country had entered the crisis with India's oil reserves meet 25% of the
solid fundamentals due to years of
country's domestic oil demand.
prudent fiscal policy and resilient India's oil and gas industry contributes over
banking sector.
15% to the Gross Domestic Product.
Israels economic growth has been 78% of the sedimentary area of the country
increasing by on average 4% annually
from 2002 to 2012.
is yet to be explored.
India is one of the top contributors in the
Israels per capita Gross Domestic
growth of the refining sector in 2012 with
Product has remained approx. $30,000
4.5 million barrels of crude oil processed
in recent years.
per day (mbpd).
Growth of the Israels economy is Indian
exports
of
refined
petroleum
largely relied on foreign investments
products reached to new record in October
and constant increase in exports and
2012 with over 1.5 mbpd, where diesel was
foreign investment.
39 %, 25 % gasoline, 15 % naphtha and 8
Foreign direct investment has reached
% jet fuel.
to all time high of $11 billion in 2011 India's petroleum product consumptions
157
which
shows
that
international
investors are show their interest in
cumulative growth for the period April November 2012 remained 5.5 %
In November 2012, petrol consumption
Israel's potential economy.
remained highest at 13.9 %, growth of

high-speed diesel remained at 1.7 %.
India's shale gas reserves are at around 290
trillion cubic feet out of which 63 TCF
could be recovered.
Natural gas sector constitutes about 9.8 %
of primary energy consumption which is
speculated to grow up to 20 %.
Approx. 65 % of natural gas consumption is
consumed by power sector and fertilizer
sector.
Government hasbeen planning to design
fuel-efficiency ratings for automobiles to
promote sale of cars that consume less
diesel or petrol.
Indian oil ministry aims to reduce energy
import dependency from 80 per cent
(current) to 50 per cent by 2020.
III.
SOCIAL FACTORS
ISRAEL
INDIA
Though it will take years before the This sector employed around 1,30,000
government will reap meaningful gas
people in 2009-2010.
revenues, it has already set up a Like
other
heavy
industries,
O&G
sovereign wealth fund to manage part
exploration and production operations can
of the new wealth.
pose a significant risk to health.
The
country
imported
significant Unlike most heavy industries which are
amount of its gas from its neighbour to
static in terms of their location and work

158
the south, Egypt which in this year was
force, the potential for risk to health
interrupted due to attacks on gas
increases in exploration and production
pipelines running through the Sinai
activities as they are usually carried out in
desert.
hostile as well as remote environments.
Israel imports nearly all of its oil Unbalance

useswhich
stand
for
approx.
100
between
environment
individual
significantly
and
disturbs
the
million barrels a year, from Russia and
physical equilibrium and causes anxiety
the former Soviet republics.
and frustration which often results in slip of

behavior, errors, safety related incidents or
accidents etc.
The most common social risks involved in
this sector are
IV.
Landlessness
Joblessness
Homelessness
Food insecurity
Poor health level
Loss of assets
TECHNOLOGICAL FACTORS
ISRAEL
INDIA
From the gas infrastructure view-point, India seeks Israels expertise in renewable
Israel has seen the development of both
energy sector.
offshore and onshore infrastructure in At a recent meet, with representatives from

the light of Mari-B discovery and
both
the
Indian
imports from Egypt.
Governments,
as
India
well
sought
as
Israeli
Israels
It is expected that with the growth in
expertise in the renewable energy sector to
supply with the development of Tamar,
meet its ambitious target of 30,000 MW of
future expansions will push gas north
power over the next five years.
as well as east of the country leading to 40 per cent of the population of the Indian
conversion of existing plants to gas and
does not have access to energy.

159
Petrotech, a registered body which is set up
new gas fired plants.

If LNG receiving and regasification
by the qualified and distinguished members
terminal is built, then it will provide
from public, multinational, private and
some short-term flexibility and in the
government in the Petroleum Sector to
long run, some more infrastructure will
discuss and showcase the achievements and
be needed.
developments of the Oil & Gas Industry in
However as the gas infrastructure
India; develop co-operation in the industry
develops and Israels power sector and
and
industrial sector become increasingly
experience and expertise in Oil & Gas
dependent
business.
on
gas
supplies,
the
share
national
and
international
requirement for flexibility and system A technological breakthrough was recently

security will also become greater.
made by Japan Oil Gas and Metals National

Corporation (JOGMEC) in which it was
successful in extraction of natural gas from
methane hydrate sea-bed deposits (also
called "fire ice" reason it being a white
crystalline solid that burns).
India has some of the biggest fire ice
reserves in the world. In case, technological
progress may allow gas to be extracted
from fire ice safely and economically then
it will be extremely beneficial to India.
Just hoping that simply India can buy
hydrate extraction technology after it will
be developed in the USA andJapan will not
do.
Deposits in Japan and the USA are mostly
found in sandstone whereas the biggest
Indian deposits, particularly those in the KG basin, were found in fractured shales.
Hence, the exploratory techniques which
160
have been developed in the US and Japan

may not be put in use in India unless some
modification. India must develop her own
technical capabilities.
India's oil companies are forced to spend
crores of rupees by way of consumer
subsidies, but a few crores for R&D have
not been spared.
V.
ENVIRONMENTAL FACTORS
ISRAEL
In
INDIA
2012
the
Israeli
Government Environmental Impact of Indian Oil & Gas
released a new series of guidelines
Sector are classified below
which was meant to ensure that
entrepreneurs seeking offshore gas and
Human, Socio-Economic And Cultural

Impacts
oil exploration permits meet more
Atmospheric Impacts
stringent criteria.
Aquatic Impacts
exploration
Terrestrial Impacts
would
be
Ecosystem Impact
required to deposit as guarantee amount
Potential Emergencies
Under
permits,
the
New
land
entrepreneurs
of 10% of the overall project; and for The abovementioned impacts have been
offshore drilling, entrepreneurs would
briefly discussed in this report
have to deposit guarantee amount of The Indian Government is set to plan for
5% of the overall project.
These
guidelines
introduction of fuel-efficiency ratings for
aim
to
allow
entrepreneurs to maximize their search
automobiles which will encourage sale of

cars consuming less petrol or diesel.
for alternative energy sources, while

setting
in
place
the
proper
environmental protection protocols.

Some say that Israel is not equipped for
the new challenge of pumping large
161
quantities of fuel from the sea and this

could
result
in
economic
extremely
and
costly
environmental
consequences.
Ministry of Environment Protection say
that Israel doesnt have the requisite
technology to deal with oil handling
and
transport
and
such
lack
of
preparation to deal with oil and gas

reserves can lead to very serious
problems such as oil spill.
Israels Energy and Water Resources
Minister,
Mr.
Uzi
Landau
spoke
publicly with great fervour about the

significance of preserving the marine
environment
while developing gas
resources but he chose not to mention

that Israel has refused to accept the
regional
treaty
to
protect
the
Mediterranean Sea named Offshore

Protocol of the Barcelona Convention.
VI.
LEGAL FACTORS
ISRAEL
INDIA
Laws and regulations with respect to The one of the major drawback in the
O&G sector are applicable in Israel are:
Exploration and Production of Oil and
1952: The Oil Law
Gassector is that the regulatory body of the
1953: The Oil Regulations
sectordoesnt have any statutory value.
1956: Income Tax (Deductions

from the Income of Holders of Oil Upstream Sector
Rights) Regulations
The upstream sector is also known as the E&P

162
1961: The Income Tax Ordinance (Exploration and Production) Sector of Oil and
[New Version]
Gas. The laws directly related to upstream
1988: Income Tax (Rules for sector is stated as follows:

Calculating Tax for the Holding and
Constitution of India;
Sale of Participation Units in an Oil
Oilfields (Regulation and Development)
Exploration
Partnership)
Regulations
Act, 1948; and

Petroleum and Natural Gas Rules, 1959
2011: Petroleum Profit Tax Law
Petroleum Profit Tax Law a.k.a. Downstream

Sheshinski Law states that the initial The laws directly related to downstream sector
levy of taxes on the companies will are stated below:
stand at 20%, and will rise gradually to
Land acquisition Act, 1894;
50%, depending on the amount of
The Petroleum Act, 1934;
excess profits whereas the rate of
The Petroleum Minerals Pipelines Act,
royalties will remain same at its current
level of 12.5%.
According
to
1962; and
various
estimations,
Board Act, 2006.
partnership profits from Tamar gas

field itself should reach around $15
billion by 2040.
The E&P of gas deposits in Israel are
conducted by private entities, both
Israeli and international. The directives
and regulations with respect to said
activity are prescribed in the Oil Law,
1952
Three types of oil rights are issued to
entities
in
the
field:
Petroleum and Natural Gas Regulatory
preliminary
permits, licenses and leases.

TABLE 10.1
163
10.3 COMPARATIVE ANALYSIS OF ISRAEL WITH INDIA
POWER & ENERGY SECTOR - Production-Consumption & Export-Import

ISRAEL
INDIA
Figures (Year)
Figures (Year)
Particulars
OIL
Production
Consumption
Export
Import
Proved Reserves
4,029
bbl/day
(2010)
238,000 bbl/day (2010)
86,010
bbl/day
(2009)
282,200 bbl/day (2009)
1.94
million
954,000 bbl/day (2010)
3.182 million bbl/day

(2010)
825,600 bbl/day (2009)
3.06 million bbl/day

(2009)
bbl 5.682
(1 January 2011)
billion
bbl
(1 January 2011)
NATUARAL GAS
Production
Consumption
Export
1.55
billion
cu
(2009)
3.25
(2009)
164
billion
cu
(2010)
billion
(2009)
0
m 52.8
cu
m 64.95 billion cu m
(2010)
cu
m 0
(2010)
cu
Import
Proved Reserves
1.7
billion
cu
m 12.15 billion cu m
(2009)
(2010)
198.2
billion cu m 1.074 trillion cu m
(1 January 2011)
(1 January 2011)
ELECTRICITY
Production
Consumption
Export
Import
53.04
billion
kWh 835.3
(2008)
47.16
billion
kWh 600.6
TABLE 10.3
165
billion
kWh
million
kWh
billion
kWh
(2008)
billion
kWh 810
(2008)
NA kWh
kWh
(2009)
(2008)
3.666
billion
(2009)
(2008)
5.27
(2009)
10.4
PROCESS
OF
E&P
166
ACTIVITIES
ISRAEL
INDIA
167
10.5 COMPANY CASE STUDIES

Six companies from oil and gas sector, three from Israel and three from India are studied in brief
to analyze the opportunities and challenges for Indian companies which have establishing
business in Israel. Companies selected are leading companies in oil and gas sector of their
respective countries.
O&G Companies in Israel
i.
PAZ
Overview: The PAZ Group, one of the Israels leading energy corporations, was established in
1922 and has served successfully for 90 years as the prominent brand of the economy. The group
is a public corporation and main business area covers Energy and Retail sector. Paz is Israels
first energy company which owns a refineryin, and supplies one third of country's fuel products.
It holds 30% of the Israeli fuel market and 31% of the Israeli gas stations.
Main Business Activities:PAZ Group is present in the refining, producing, storing, importing
and marketing of fuel products. Moreover, Paz has fuel product storage and distribution
terminals and a network of hundreds of filling stations, convenience stores and retail complexes.
Divisions: There are three divisions PAZ which are:
a) Retail and Wholesale:It carries out PAZ's real estate, retail and marketing operations.
b) Industries and Services: It carries out the operations of PAZs subsidiaries which are
involved in developing, manufacturing and marketing fuel by products.
c) Refining and Logistics:(Paz Ashdod Oil Refinery)is involved in manufacturing petroleum
products & electricity, both for its own consumption and for selling to customers.
Future Outlook: The Companys refining facilities are currently undergoing an upgrade which
will increase refinery turnover to approximately more than five million tons per annum. This
move will improve PAZ refineries product mix, decrease/reduce dependency of the Company
168
on external sources & imported materials, and increase production of electricity to more than 100
MW.
ii.
DELEK
Overview: Delek Israel Fuel Corporation, founded in 1951 by the Govt of Israel,deals in energy
& logistics. It has hundreds of gas stations in Israel itself, convenience stores & retail areas, and
finally a successful IPO to its credit.
Main Business Activities: Delek is involved in energy & infrastructure activities, with some
investments in upstream & downstream energy, water desalination & power plants. Deleks
subsidiaries are involved infinancial and insurance services. Delek has built an extensive
network of global downstream assets, including 1,900 gas stations and convenience stores in the
U.S., Europe and Israel, and petroleum refineries in the U.S.
Asset Holdings: Delek holds assets in Mari B gas field, Dalit gas field, Leviathan gas field,
Tamar gas field, Tanin gas field, Dolphin gas field, Noa and Pinnacles, Aphrodite gas field, Yam
Tethys Partnership. Following table shows the percentage of asset holdings in Israel gas field:
Gas Field
Holdings
Leviathan
45%
Tamar
32%
Tanin
53%
Mari B
53%
Dalit
32%
Dolphin
45%
Noa
53%
Pinnacles
53%
Divisions: Delek runs three divisions which are: a) Gas Station and Commercial Area includes
the sale of fuels at public gas stations, operation of convenience stores in the fueling areas, and
development, establishment and operation of public gas stations and convenience stores, b)
Direct Marketing includes direct marketing and distribution of petroleum products in areas
169
other than gas stations and commerce andc) Storage and Distribution Of Fuels: Providing
infrastructure services to the fuel market (storage and distribution of fuels).
BAZAN Oil Refineries
iii.
Overview: Bazan, Oil RefineriesLtd. (ORL), is among Israels largest energy groups. It was
established in 1938 and privatized in 2007, located in the bay area of Haifa, and Israel's largest
Oil refinery. Refining capacity per year of ORL is around 9.8 million tons of crude oil.
Main Business Activities: Its operations include one of the largest and most complex refineries
in the Eastern Mediterranean, integrated petrochemical and aromatic manufacturing facilities and
a global trading business. It provides a variety of products used in private consumption,
industrial operation, infrastructures, agriculture and transportation.
Divisions: The divisions include refining, polymers and aromatics.

a) Refining: companys 90% of a business represents refining activities. By using complex
refinery facilities ORL produces refined products with a high added value. The Company's
maximum crude oil refining capacity is approximately 27,000 tons per day.
b)Polymers & aromatics:Through wholly-owned subsidiaries company is active in the area of
Aromatics and Polymers which are Gadiv Petrochemical Industries Ltd. and Carmel Olefins Ltd.
The Company also provides infrastructure services; it also providespower and heat services to
industrial customers in the Haifa Bay.
O&G Companies in India

i.
INDIAN OIL
Overview: Indian Oil Corporation Ltd. incorporated in 1964, is Public ltd. Company and Indias
largest company by sales with a turnover of Rs. 4, 09,957 crore ($ 85,550 million) and profit of
Rs. 3,955 crore ($ 825 million) for the year 2011-12, having a dominant market share, Indian Oil
is widely recognized as Indias dominant energy brand and customers perceive Indian Oil as a
symbol of reliability for high-quality products & services.
170
Business Areas: Main business areas include refining, pipelines, natural gas and petrochemical
a) Refining- Indian Oil controls 10 of Indias 22 refineries. Refining capacity of the group is
1.30 million barrels per day which makes itthe group with the largest share among refining
companies in India with 31% share of national refining capacity.
b) Pipelines- The Company has anextensive network of 11,163 km in length of petroleum
product,crude oil and gas pipelines with the capacity of around 77.258 million metric tons/year
of oil and 10 million metric standard cubic meters/day of gas. The operational turnover of
pipelines was calculated at 75.55 million metric tons during FY: 2011-12.
c) Natural Gas- Indian Oil is a co-promoter of Petronet LNG Limited (PLL) for setting up
Liquefied Natural Gas terminals at Dahej & Kochi. In India, the demand for Natural Gas has
been consistently growing and it cant be met by indigenous production (currently in operation).
Hence, Indian Oil is currently in the process of sourcing some more quantities of LNG in order
to meet the countrys increasing requirements.
Future Outlook: Indian oils future projects include 15 mmtpa grassroots refinery at Paradip,
Orissa, naphtha cracker and polymer. Panipat refinery expansion from 12 to 15 mmtpa The
Corporation has envisaged an investment of around Rs. 30,000 crore in the petrochemical
business in a few years from now. The Company is also focusing on increasing its name and
presence in the countrys petrochemical sector. Petrochemical business has been identified as a
main/prime driver of the Companys future growth.
ii.
ADANI
Overview: Adani is a conglomerate group with its formidable presence in numerous and
different businesses across the world like Infrastructure, Power, Global Trading, Logistics,
Energy, Port & SEZ, Mining, Oil & Gas, Agri Business, FMCG products, Real Estate
Development, Bunkering. Ithas entered the power sector in 1996. It is now in a Public sector unit
having headquartered in Ahmedabad.
171
Adani Power Limited (APL): Adani Power Limited has commissioned the 1st supercritical 660
MW power unit in India. The 1st power-transmission project of around 400KV Double Circuit
Transmission System from Mundra plant to Dehgam (430 kms) has been released with two more
in the implementation stage.
Business Areas: Main three activities includes power generation, power transmission and solar
power
a) Power Generation: Mundra Thermal Power Project, Tiroda Thermal Power Project, Kawai
Thermal Power Project,
b) Power Transmission: Already APL has developed & commissioned around 400 KV D/C
dedicated Mundra-Dehgam transmission line of about 430 Kms, which is the by far the longest
dedicated transmission line by any private sector.
c) Solar Power: APL is also setting up solar project of around 100 MW at Surendranagar,
Gujarat.
Future Outlook: Upcoming power projects include Pench Thermal Power Project, Bhadreshwar
Thermal Power Project.
iii.
ONGC
Overview: ONGC (Oil and Natural Gas Corporation) is the only fullyintegrated petroleum
company of India. It operates along the whole/entire hydrocarbon value chain. ONGC, founded
on 14 August, 1956 by Indian Government (current holding of 69.23% stake in equity), is
involved in exploring & exploiting hydrocarbons in 26 sedimentary basins of the country, and it
also owns & operates more than 11,000 kilometers of pipelines in India. CurrentlyONGC
Videsh, ONGCs international subsidiary, has projects in 15 different countries.
Business Activities: In India,ONGC has, till now, discovered 6 out of 7producing basins. It has
approximately 7.59 billion tonnes of in-place reserves of hydrocarbon. It has made more than
320 discoveries of O&G and reserves of 2.69 Billion Metric tonnes of Oil plusOil Equivalent
Gas from domestic acreages.Cumulatively the Company has produced approximately 851 MMT
172
(Million Metric Tonnes) of crude oil & around 532 BCM (Billion Cubic Meters) of Natural Gas,
from about 111 fields. The Company has, till now, won 121 out of 235 Blocks (which is more
than 50% in 8 rounds of bidding), under the NELP of the Indian Government. It currently
produces more than 1.24 million barrels of oil equivalent per day, contributing to more than 64%
of the countrys domestic production. The Company possesses about 1/10 of the total refining
capacity of India.
ONGC Videsh: ONGC Videsh Ltd. (OVL) is ONGC's wholly-owned subsidiary. It is Indias
biggest multinational, with around 30 O&G projectsin 15 different countries with a cumulative
investment of more than USD 15 billion, to source equity for energy (O&G) security of India.
Future outlook: ONGC targets to double its production over the span of one year period with 45 per cent growth wherein present growth rate is 2 percent.
10.6 OPPORTUNITIES
Since Israel's natural gas reserves have been estimated at 700 billion cubic metres (bcm) which is
worth around $240 billion, there exists a host of opportunities for India in the multi-faceted
country. India imports around 70-80% of its needs of oil and gas. In addition 100% FDI is
allowed in the oil and gas sector in India. Hence India can enter into an MOU with Israel under
which Indian Companies can carry out E & P activities in Israel. Since India is the 2nd most
populous country in the world, its future demand of oil and gas is expected to be huge and
consistent. Therefore Israel can find a consistent export partner in India and India a reliable
import partner in Israel. India can hope to receive tax benefits, subsidies etc. from Israel due to
its massive and long-term demand.
India can even offer the Israeli Government the some stake in its Public Oil and Gas Companies
in return of carrying E & P activities in Israel. This would lead to sharing of profits of Indian
Companies with that of Israeli Government which would be a lucrative and profitable deal for
Israel. In this way both the countries can grow and prosper.
Of all the Oil & Gas companies in India, ONGC would be an ideal choice for carrying out
Exploration and Production Activities in Israel. Further it can also carry out Refining Activities
173
in Israel as India is the 5th largest fifth largest country in the world in terms of refining capacity
and so it can competently handle Refining Activities in Israel.
CHALLENGES
One major challenge that India may face by entering into trade of oil and gas with Israel is the
risk of war of Israel with neighboring countries and political unrest/instability of Israel. If at any
time a war breaks out between Israel and its neighboring countries, then India will be adversely
impacted both in terms of trade with Israel and its neighboring countries.
Another challenge that India can face is transportation of Oil and Gas from Israel to India. The
only means of transport of oil and gas which India can adopt is sea route as Indias neighboring
countries can pose threats to the same. Hence either oil or gas can be shipped via sea or
transported via pipelines under the sea bed which will most probably prove to be quite expensive
and cumbersome process.
Further some experts believe that while extracting crude oil a lot of oil is collected but in case of
shale oil, most of it is economically not recoverable. In addition to this cost of extracting crude
oil is much less than the cost of extracting shale oil. Shale oil extraction can prove to be
beneficial only when prices of crude oil rise.
174
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176

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A

GLOBAL / COUNTRY STUDY AND REPORT

Gujarat Technological University

MASTER OF BUSINESS ADMINISTRATION

Under the Guidance of

N.R Institute of Business Management

Summary of 3rd SEM

1.2Major Players in the Defence Industry in Israel

1.3Present Trade : Israel

1.7Products & Services offered by players in India

1.8Barriers to Entry in Indian Defence Industry

1.9Present Trade: India

1.10 Technology Advancement in India

1.11Comparison of Defence Industry of Israel & India

1.12Comaprison of Defence firms

2.2Electronic Industry in Israel

2.3Trade Policy : Israel

2.4STrade Policy: India

2.5Legal Aspects to Electronic Industry

2.6 Present Trade: Israel

2.7 Present Trade: India

2.8 Technological Scenario

2.9 Patterns of Corporate Investment: Israel

2.11 Investment Climate in Israel

3.7 Environmental Factors

3.9 Investment Climate in Israel

4.2Diamond Industry of Israel

4.3Companies of the Diamond Industry

4.4Financial Comparison of Companies

4.5 WTO Trade Policy

5.2Major Companies and Products

5.4WTO Trade Policy

5.6 Present Trade Policy

5.8 Prevaling Investment Pattern in Israel

5.10 Comparison of India and Israel

5.11 Barriers for Indian Companies

6.4Indias Communication Industry

6.5Products/Services of Communication Industry

6.6 Major Companies in India

7.2Major Players in Israel

7.4 Major players in India

7.5Exports & Imports

7.6WTO Trade Policy

7.7Present Trade Policy

7.11 Comparative Analysis of Companies

8.2 Major Players of Israel

8.3Products/Services offered by companies in Israel

8.4 Present Trade:Israel

8.5 Technology: Israel

8.7 Products/Services offered by companies in India

8.8 Present Trade:India

8.9 Technology: India

8.10 Comparison of Israel & India

Information Technology Sector

9.2 Political Factors

9.3 Economic Factors

9.4 Social Factors

9.5 Technology Factors

9.6 Legal Factors

9.7 Environmental Factors

Power & Energy Sector

10.2 PESTEL Analysis of Oil & Gas Sector

10.3 Comparative Analysis Of Israel and India