Tuesday, May 31 2005 16:27 Hrs (IST) - World Time -

Jerusalem: India and Israel have signed an agreement to set up a joint industrial Research and Development fund to encourage investment and joint ventures.

Minister of State for Science and Technology Kapil Sibal and Israeli Deputy Prime Minister and Minister for Trade and Industry, Ehud Olmert signed the agreement under which each side will contribute $ 1 million each initially to provide risk-free grants to entrepreneurs from both sides.

The two Ministers outlined cooperation in the areas of nano-technology, biotechnology, water management, non-conventional energy and space and aeronautics as five priority areas of "common interest" for enhanced collaboration.

"We have collaborated with each other in defence and strategic areas but we need to move on to areas in which we can affect the lives of the ordinary people," Sibal, the first United Progressive Alliance (UPA) Minister to visit Israel, said.

Claiming that the two countries were "IT superpowers" with the sector contributing a major chunk of the income, he said, "India can be the centre of joint Indo-Israel ventures to serve the rest of the world."

"If we can use some of your technology in the field of agriculture, we will leave far behind other countries in production," Sibal added.

India is the fifth country with which Israel is setting up such a fund.

Olmert, who visted India in December, said he was struck by the immense possibilities of cooperation between the two countries.

"There is enormous potential. I think that India is emerging as a major economy and Israel has designated India as one of the main targets of our foreign trade in the next five years," he said.

"In selection of the projects and proposals, we will adopt the bottom-up policy. The market demand will be the basic guiding principle," Azriel Hemar, Deputy Chief Scientist at the Trade and Industry Ministry, said.

Sibal also participated in a workshop, "India and Israel: R&D as a strategic Bridge" at the prestigious Technion-Israel Institute of Technology in Haifa.

Calling cooperation in science and technology as the real bridge between countries that cuts across national boundaries, he said the two countries should increase interaction between young students to forge a permanent bond of friendship.

A nine-member delegation led by Prof Anand Patwardhan from the Ministry of Science and Technology participated in the workshop aiming at outlining areas of cooperation.

"We had fruitful discussions and the interaction with the Israeli industries was an eye-opener. We need to learn how smoothly knowledge transfer takes place between the companies and the universities here and replicate that in our own country," a delegation member told sources.

India has emerged as Israel's second largest trading partner in Asia with bilateral trade registering an impressive ten fold growth since 1992 reaching the $ 2.4 billion mark last year.