India, Israel sign bilateral investment pact

India and Israel on Monday signed a modern bilateral investment treaty (BIT) aimed at enhancing cross-border investment flows and providing legal certainty to investors, as both nations look to deepen their economic partnership.

The treaty, signed by finance minister Nirmala Sitharaman and her Israeli counterpart Bezalel Smotrich, marks the first time India has signed a BIT with a member of the Organisation for Economic Cooperation and Development (OECD), and it replaces the earlier pact signed between the two countries in 1996.

“This treaty reflects our shared intent to build a robust economic relationship and facilitate smoother investment processes,” Sitharaman said at the signing ceremony.

Smotrich, on a three-day visit to India, described the agreement as “a strategic move that strengthens Israeli exports and offers a secure, transparent framework for doing business in India.”

India and Israel’s bilateral trade currently stands at ₹35,212 crore (around $4 billion), with total mutual investments estimated at $800 million.

From 2000 to 2025, Indian companies invested about ₹3,900 crore ($443 million) in Israel, while Israeli firms invested ₹2,942 crore ($334 million) in India.

The treaty provides a framework for investor protection through internationally accepted standards and offers non-discriminatory treatment, safeguards against expropriation, and independent arbitration.

It also ensures transparency in transactions and guarantees the free transfer of funds and compensation for losses.

Officials said the BIT is expected to pave the way for a future free trade agreement (FTA) between the two countries.

Both sides identified key sectors that could benefit from the treaty, including cybersecurity, defense, innovation, fintech, infrastructure, financial regulation, and digital payments.

The revised treaty has been aligned with India’s reformed BIT model, which balances investor rights with the government’s right to regulate in the public interest.

The framework preserves policy space for sovereign decisions while offering sufficient protection for long-term business commitments.

Smotrich’s visit is part of a broader push to expand economic ties between India and Israel, with the BIT serving as a foundational step toward closer strategic and trade relations.