Interview with Shalom Simhon

Enhancing India-Israeli bilateral trade relations have been one of the cornerstones for Ministry of Industry, Trade and Labor’s (MOITAL) trade policy. MOITAL was quick to realize India’s economic significance and in recent years it has been working to develop and apply several initiatives intended to enhance trade as well as realize the full potential of the economic relations between the two nations. Naturally, one such initiative is the establishment of FTA. The underlying objective of FTA that is currently under negotiations between the governments of Israel and India is to establish a set of transparent and predictable trade rules for exporters and importers on both sides. In addition, such an agreement would further liberalize the already prosperous trade between the two countries. Trade between Israel and India exceeded USD $5 Bn in 2011 (in comparison to USD 3 Bn worth of trade in 2009) and it is estimated that FTA agreement would contribute to this pattern of growth. Once the negotiations are successfully completed, and the agreement is implemented, a significant rise in trade volume in numerous industrial sectors, including textile could be expected.

Given rather small size of local market, export plays a crucial part for the textile industry in Israel. However, in last two years, decrease has been recorded in the export of textiles to its traditional overseas destinations, namely the US and Europe, due to economic slowdown. Generally, about 50 percent of Israeli textile exports are shipped to the American market, about 40 percent to the European markets and remaining 10 percent to rest of the world. In 2011, total value of textiles and clothing exports was around one billion USD.

Textile industry is a massive consumer of water and energy, and creates a large amount of polluted water as part of the output of textile process. The world today is oriented to manage industrial processes much more efficiently, environmentally and economically. This creates new demand for innovative technologies and opens opportunities. Since, textile industry is pretty much same everywhere in the world, solutions are suitable for all countries and this is why investors around the globe are interested in technologies that Israeli companies have developed for the local textile industry.

It is a rather known secret within the ranks of international fashion community that Israel has developed unique capabilities in terms of innovation and technology in the field of fashion design. Many Israeli designers have used these capabilities as a platform to cultivate international reputation by applying homegrown technologies in their work, which makes Israeli fashion design one of the world's most unique, daring and innovative. As a country of immigrants, Israeli design is inspired and influenced by aspects from different cultures merging into one another to create a blueprint for Israeli design. "Shankar" and “Bezalel” fashion design departments are recognized throughout the world for their quality of teaching as they continue to nurture the talents. Nevertheless, technological innovation in Israel does not rest exclusively with fashion design. As the country has also been a leading manufacturer of technical textiles and here, as with the fashion industry, it is locally developed technologies that serve as the foundation of success. Among other applications, Israeli innovation in technical textiles can be found in a range of Kevlar garments that are being developed in Israel; in Israeli-made Anti-Static garments used by Hi-Tech manufacturers; and in the production of geotextiles that have various uses in agriculture or highway building. In addition, Israel has some of the world’s leading manufacturers of non-woven garments. All of the above suggest that Israel’s efforts and consistent allocation of government resources to across-the-board technological R&D is a policy that has essentially been an engine for innovation in many industrial sectors and the local textiles is no different in this sense. Moreover, Israel is also a member to two QIZ (“Qualified Industrial Zone”) agreements that enables the exporting of textile products to the USA free of duty following a joint manufacturing process of such products with Egypt and Jordan – Israel’s partners to such agreements.

As for imports, most of the finished textiles and clothing products are imported from China, whereas raw materials for the local industry are imported from several Asian countries as well as Turkey.

In recent years, Israeli economy was shielded from the severe impacts of crisis that hit the global economy. This was the result of several factors, including careful policies applied by the bank of Israel. In addition, as an export oriented economy, our companies were attentive, fast-responding and diversified into various international markets, compensating for the slowdown in the European and American economics by increasing their activities in growing markets such as Asia and Latin America. Country’s proven record of success as well as economic and financial stability has led to the world’s leading multinational corporations choosing to establish research and development (R&D) and production centers in Israel. At present, over 260 foreign commercial R&D centers are helping industry leaders stay on the cutting edge.

Investors choose Israel for a number of reasons. Country’s large concentration of skilled workers has been recognized by numerous international rankings, and scientific research institutions are ranked first in the world according to the World Economic Forum (WEF) Global Competitiveness Report. Besides, its workforce is also particularly open to creativity because of the informal but effective get-down-to-business culture, exceptional ingenuity and entrepreneurial spirit. The WEF ranked Israel 3rd worldwide for innovation and called Israel “an innovation powerhouse.” This spirit of creativity and entrepreneurship, which has earned Israel a nickname, “the start-up nation," has led to many breakthrough technologies that have become a regular part of our lives. Israeli government also works closely with the private sector including technology incubators and an active private venture capital system to help maximize the efficiency with which our homegrown technologies take off globally.

Textiles comprised about 2.2 percent of the entire industrial output in 2011. Industrial output, in turn, comprised about 15 percent of Israel’s GDP in 2011. In that year, about 3.2 percent of country’s industrial work force was working in the textile industry.