India and Israel decided last week to negotiate a bilateral free trade pact.



This was the outcome of a 45-minute meeting between Minister of State for Commerce Jyotiraditya Scindia and Israeli President Shimon Peres.



Following the presidential meeting in Jerusalem, Minister of Industry, Trade and Labor Benjamin Ben-Eliezer told Indian Union Minister that "The start of procedures toward a free-trade agreement with India is a breakthrough in commercial relations between the two countries”.



Scindia informed Ben-Eliezer that India's Prime Minister Manmohan Singh has accepted an Israeli proposal to begin negotiations on a free-trade agreement.



It was also mutually agreed that the next meeting of the Joint Trade and Economic Committee should be held at an early date in New Delhi, he said, adding that the challenges posed by global terrorism were also discussed.



In May 2007, Israel formally asked India to open talks on the subject. The two countries will now begin negotiations on a free-trade agreement.



Ben-Eliezer said, "Reaching a free-trade agreement between Israel and India will underpin bilateral trade relations, and is expected to give them a major boost”.



The Ministry of Industry's Foreign Trade Administration expects a joint India-Israel economics committee to be set up by mid-year to reach additional agreements for facilitating the activities of Israeli companies in India.



Israel-India trade, including diamonds, totaled $3 billion in 2009, 25% less than in 2008. However, bilateral trade excluding diamonds rose by 14% to US$1.77 billion. Israeli exports of goods to India fell 10% to US$1.21 billion in 2009, while imports from India fell 26% to US$558 million. The ministry says that India is Israel's tenth largest trading partner. Bilateral trade increased at a compounded annual growth rate of 15% over the last five years.