The state rewards exports. It is time it also rewarded domestic production

The shekel-dollar exchange rate affects the decision every day whether to invest in a factory in Israel, expand a production line, or move operations to another country. While a weak dollar lowers the cost of imported raw materials and machinery, at the same time it erodes export revenues and makes it difficult for Israeli manufacturers to compete globally and against imports entering the local market.

The state does not have direct control over the exchange rate, but it does have control over tax policy. A competitive corporate tax is a key lever in the government's hands to encourage industrial investment in Israel, by both Israeli and foreign companies. However, the existing policy grants a significant advantage mainly to factories that export. Those who produce for the Israeli market, even if they are advanced, efficient, and essential, may be left out of benefit tracks simply because their customers are here. This is a distortion.

A factory that supplies food, medicine, packaging, building materials, medical equipment, protective gear, industrial components, and essential chemicals is no less deserving of an incentive than a factory that sells the same products overseas. Industry is not just a line of growth data. It is Israel's productive resilience: the ability of hospitals to continue receiving equipment, of food chains to remain stocked, of construction sites to operate, and of other factories to receive raw materials and components. When the sea is closed, when shipping becomes expensive, or when global supply chains are disrupted, the ability to produce here turns from an economic policy into a layer of national defense.

There are those who see local industry only as a supplier to a small market. This is a short-sighted view. Factories that operate for the Israeli market create employment in the periphery and the center, support hundreds of small businesses along the supply chain, and give the state room to maneuver when the world is less available. They are not a burden that requires protection, but an asset that requires policy. The price of the lack of policy is expressed in delayed investments, shrinking production lines, workers losing opportunities, and industrial knowledge moving abroad. Later, this is paid for dearly: in dependence on imports, shortages, price increases, and the loss of the ability to recover quickly from a crisis.

Therefore, a preferred corporate tax is required also for industry that does not export, under the clear condition of a return to the economy: investment in machinery and production lines, increased productivity, training of workers, local procurement, and maintaining operations in Israel. This is not an automatic benefit, but a deal between the state and the factories: less tax on profits, and in return, more investments, more quality employment, and more Israeli production capacity.

Even a foreign investor does not look only at the cost of labor or the price of land. They examine whether they will have certainty, skilled workers, infrastructure, local suppliers, and tax conditions that allow for building operations over time. When an international company chooses where to establish or expand a factory, Israel should not punish those who choose to produce for its market. It should clarify that local production is a strategic asset. Such a track must be transparent, stable, and based on clear metrics. Factories need years of certainty to make decisions about machines, buildings, training, and production lines, not one-time grants that change with every budget. This is how Israel can keep the investments that are already operating here and compete for investments that have not yet arrived.

The choice is not between exports and the local market. A smart state strengthens both and rewards factories according to the value they create in Israel, not just according to the address to which the invoice is sent. It is time that those who produce for us also receive a tax policy that works for them.

Roby Ginel is the CEO of the Manufacturers Association.