Chapter two of India – Israel Relations: Beyond defense and diamonds
The Indo-Israeli bilateral partnership is a unique case study for students of international relations.
Bilateral trade between India and Israel had grown from a meager $200 million in 1992-93 to $6 billion in 2012-13. However, since then it dipped to $4.4 billion and had stagnated around that mark. This, however, is not a limiting statement for the relations between two countries, but a remarkable example of how myopic such financial benchmarks are to evaluate cooperation between two modern, knowledge-based economies.
Technology to power India’s booming internet-based market
In 2018, when Flipkart, the leader of the $32 billion Indian e-commerce market, wanted to deliver critical insights about the product inventory to its sellers, it looked towards Israel for solutions. In a major buyout, Flipkart, which is now a subsidiary of Walmart, acquired Israeli retail intelligence platform, Upstream Commerce. The acquisition is touted to be vital for maintaining a narrowing edge over Flipkart’s rival, the aggressively growing Amazon India. Within just six months, Flipkart doubled its presence in Israel by setting up an R&D base to scout for additional acquisitions in the country. More recently, Zee Entertainment Industries Ltd partnered with 14-odd Israeli companies to develop the user experience of its online-streaming platform, ZEE5. The Indian digital entertainment sector is fiercely competitive with players like Prime Video, Netflix, and ALTBalaji and at least 12 others. It underscores the potential value that Israeli technologies can bring for Indian startups.
It’s also not just startups who are tapping the Israeli innovation ecosystem. Large Indian corporations also have not been shy to ink a plethora of deals and collaborations with Israeli startups, especially over the last five years. This includes – Reliance, Infosys, Tata Consultancy Services, Tech Mahindra, L&T, and Apollo Hospitals. While Reliance and Infosys have signed strategic partnerships and invested in multiple Israeli companies, TCS and Tech Mahindra have set up entire R&D centers in Israel. One can soon realize that Indian and Israeli innovation ecosystems are complementary to each other. Primarily serving a domestic market of 1.3 billion population, most valuable Indian startups chiefly consist of B2C service providers and aggregators in sectors such as e-commerce, food delivery, mobile wallet, ride-sharing, etc. The rise of such companies is primarily fueled by the explosive growth of consumption abilities of the middle class and the deep penetration of mobile internet. On the other hand, Israel has been home to pioneering B2B deep-tech and product companies. It is easy to see how some of the Israeli companies can bring innovative solutions to challenges that some of the rapidly scaling startups face in India.
Efforts to solve India’s billion-dollar healthcare problem
Israel’s healthcare industry has been one of the top contributors to its largely export-driven economy. According to the annual industry report published by Israeli Advanced Technological Industries at the MIXiii-BIOMED-2018 conference in Tel Aviv, pharmaceutical and medical technology exports accounted for almost forty percent of the total high-tech exports from Israel, however, they are challenged while scaling up for bigger markets. Looking eastwards, India seems to be perfectly poised to provide a largely unexplored market. With a 1.28 billion strong population, rise in the frequency of lifestyle diseases, and increasing spending capacity of the middle-class, more Israeli healthcare innovators should look towards India to solve the next “billion-dollar problem”. India is known to be an extremely price-sensitive market and only a third of the Indian population has some kind of medical insurance. These factors have made India an arduous market for cutting-edge technologies to penetrate. But, Israel is no stranger to the Indian healthcare industry. Joining the league of defense, agriculture, and water technology, healthcare has become a major area of focus between the two countries over the years with quite a few success stories. Earlier this year, an Israeli startup – GlucoMe entered into an exclusive agreement with Apollo Sugar, a part of India’s largest chain of multispeciality hospitals to integrate its wireless blood sugar monitoring kit into Apollo’s home-care kit. In 2017, Zebra Medical Vision collaborated with Bangalore-based Teleradiology Solutions to employ’s Zebra’s proprietary deep learning analytics on radiology data to multiple healthcare centers across India. Both governments have taken pro-active roles to boost collaboration in the healthcare sector. Such initiatives, including the India-Israel Innovation Fund, numerous hackathons such as the TechEmerge challenge, aim to help Israeli startups launch pilot studies in India with the help of an Indian partner.
Modernization of the cornerstone of India’s primary sector – agriculture
India is home to second-largest agricultural land in the world, with close to fifty-eight percent of the population directly engaged in agriculture as their primary source of employment. It is already among the top fifteen agricultural exporters in the world and the government is aiming to achieve an export target of $60 billion by 2022. Towards this vision, the government has allocated a significant fraction of its annual union budget (2018-19) for undertaking multiple projects in agriculture, including projects to irrigate nearly 20 million hectares of land.
However, the adoption of technology has not been widespread and this presents a strategic area of cooperation between Israeli agri-tech companies and Indian agricultural distributors. Israel is a booming hub for agricultural startups with more than 400 companies active in the sector, according to Startup Nation Central, a non-profit organization mapping the innovation ecosystem in Israel. In 2017, the Israeli agri-tech sector raised about $141 million, an increase of 45 percent from the previous year. At the governmental level, India and Israel are cooperating in the form of India-Israel Agricultural Project by imparting capacity building programs throughout India, with the help of Israel’s external aid agency, MASHAV.
However, there is a pressing need for Israeli private companies and startups to collaborate with Indian partners and distributors to bring advanced agricultural technologies in India. In 2018, an Israeli greenhouse company, Top Greenhouses, and an Indian agricultural support company, EPC Mahindra have agreed to set up a new agricultural joint venture in India. EPC Mahindra is a wholly-owned subsidiary of Mahindra Group, one of the largest business conglomerates in India active in nearly twenty key industries. EPC Mahindra is a pioneer of micro-irrigation systems in India and provides various solutions relating to irrigation and agronomic support across India. On the other hand, Top Greenhouses is one of the leading Israeli protected agriculture service providers with clients in over a hundred countries. This has been largely possible by a 2011 policy, up to 100 percent of foreign investment is permitted in the agricultural sector in India.
Education and research – preparing the next generation of innovators
It is the part that often gets neglected in media coverage. There are more than a thousand Indian students studying or researching in leading Israeli universities, such as the Weizmann Institute, Hebrew University, Tel Aviv University, and Technion. Many of these Israeli-trained students return back to India, start their own research labs, work for Indian R&D companies, and become advocates of Israeli technological prowess. Israeli universities are also champions of commercializing academic inventions. Each year, Israeli technology transfer offices generate more than $2 billion as direct sales or royalties for their intellectual property and lead to the creation of multiple startup companies. This, in turn, helps to pump more capital from industrial partners into the basic research at these universities. As a direct result of it, for a nation with just over 9 million people, Israel lists more companies on NASDAQ than any other country, second only to the US. Not surprisingly, the Tata Group, one of India’s leading conglomerate, has been a lead investor in Ramot, the tech transfer office of Tel Aviv University to gain priority rights over the inventions originating from Tel Aviv University.
Summary: There have been only a few countries with whom India has witnessed such remarkable growth in a such short span of time. This is not just fuelled by demand and supply of commodities but an insatiate desire for knowledge, intellectual curiosity of the people, and a willingness to share the knowledge for a shared future.
The essay has been written as an entry for an essay competition by Embassy of India, Tel Aviv. Excerpts from the essay have been sourced from my blog and previously published op-eds listed below. I declare to own all the intellectual property: