The Bilateral Investment Agreement (BIA) signed between India and Israel on September 8 last year in New Delhi has entered into force with effect from Saturday, the Union finance ministry said in a statement.
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“The BIA is a landmark step towards strengthening bilateral economic relations and ensuring a secure and predictable investment climate,” it said, adding that the BIA was robust in protection of investment and investor with respect to their investments while being flexible enough to retain sovereign policy space in line with legitimate public policy objectives, reflecting modern principles and the evolving jurisprudence of international investment law.
The BIA is expected to contribute to increased cross-border investment activity and further deepen the economic partnership between India and Israel, the ministry said.
The agreement was signed in September 2025 by Union finance minister Nirmala Sitharaman and Israeli finance minister Bezalel Smotrich in New Delhi. Agreement also included provisions to safeguard investments against expropriation, ensure transparency and enable smooth transfers and compensation for losses.
The two countries were negotiating a BIA for several months. According to a HT report on October 14, 2024, the treaty was aimed at boosting economic ties as companies from both sides were keen to forge alliances in sectors such as agriculture, water, energy, infrastructure, innovation, technology, cybersecurity and space.
The new agreement will replace an earlier bilateral investment treaty (BIT) that was signed between India and Israel on January 29, 1996, after full bilateral diplomatic relations between the two nations were established in 1992.
Bilateral investment treaties are mutually agreed legal instruments between two countries for fair and equitable treatment of foreign investments on a par with domestic firms. Using the model treaty of 1993, India had signed similar pacts with 83 countries till 2015 and 74 of these were enforced.
New Delhi, however, revised the model BIT in 2015. After the revised text of 2015, the government terminated most of the investment treaties with 77 countries and started renegotiating them.
Officials said India-Israel economic relations flourished post-Covid and that was reflected in a significant year-on-year jump in merchandise trade until Hamas’s terror attack on October 7, 2023, which led to a prolonged conflict in the region and disrupted the bilateral trade mainly due to a deteriorating security situation and trade route disturbances.
