The Office of the Chief Scientist (OCS) of the Ministry of Industry, Trade and Labor is responsible for implementing the government's policy of encouraging and supporting industrial research and development in Israel through the Law for the Encouragement of Industrial R&D. The OCS provides a variety of support programs that operate on an annual budget of about US $300 million. This is spent on about 1,000 projects undertaken by 500 companies. These programs have helped make Israel a major center of hi-tech entrepreneurship.

The main OCS' program (the R&D Fund) supports R&D projects of Israeli companies by offering conditional grants of up to 50% of the approved R&D expenditure. If the project is commercially successful, the company shall be under the obligation to repay the grant by royalty payments.

A new support program for traditional industry was launched in 2005 by the OCS, which offers separate evaluation and discussion for projects from traditional industries.

Project Centers -The MNC establishes a Projects Center in order to identify Israeli partners with whom it will conduct joint R&D projects. Government funding will be the lower of the following three:

a) 40% of the total operational costs of the Projects Center

b) 50% of the total investments the Projects Center is conducting with the Israeli partners.

c) The total investments the Projects Center will invest in the periphery (priority) areas and Traditional Industries.

Domestic Support

Besides the main OCS program other domestic support programs include:

· The Technological Incubators which provide a framework and support (including grants of up to 85% of approved expenses) for nascent companies to develop innovative technologies.

· The Heznek-Seed Fund through which the government matches an investor’s investment in the share capital of a seed company, later giving the investors an option to purchase the government shares. Grants are up to 50% of the approved work program.

· The Tnufa Program is designed to encourage and support an individual entrepreneur in his initial efforts to build a prototype, register a patent, design a business plan etc. Grants are up to 85% of the approved expenses for a maximum of $50,000 for each project.

· The Magneton and Noffar programs are designed to support applied academic research in all areas and especially in biotechnology and nanotechnology in order to promote the transfer of the technology to the industry. Grants are up to 66% and 90% of the approved expenses respectively.

· The Magnet Program supports the formation of consortia comprised of individual firms and academic institutions in order to jointly develop generic, pre-competitive technologies by offering grants of up to 66% of the approved budget.

Source: Foreign Trade Administration Investment Promotion Center
Ministry of Industry, Trade, and Labor, State of Israel