India-Israel Bilateral Investment Treaty (BIT)
India and Israel have signed a bilateral investment treaty (BIT) to enhance investments, currently valued at approximately $800 million. This strategic move comes as India seeks to diversify its exports and expand its foreign investor base amid global economic challenges.
Key Highlights of the Treaty
- The BIT was signed by Indian Finance Minister Nirmala Sitharaman and Israeli Finance Minister Bezalel Smotrich in New Delhi.
- This agreement is India's first BIT with an OECD member following the introduction of a new model BIT text in 2016.
- The treaty replaces an earlier agreement from 1996, which was terminated in 2017 as part of India's investment treaty policy changes.
Objectives and Benefits
- The treaty aims to provide greater certainty and protection for investors, promoting trade and mutual investments.
- It ensures a minimum standard of treatment and includes an independent dispute resolution mechanism through arbitration.
Additional Provisions
- The agreement includes safeguards against expropriation, ensures transparency, and facilitates smooth transfers and compensation for losses.
- It balances investor protection with the state's regulatory rights, preserving policy space for sovereign governance.
Investment and Economic Cooperation
- Between April 2000 and June 2025, India received $338 million in FDI from Israel, accounting for 0.05% of total FDI inflows during this period.
- Indian investments in Israel are of a similar magnitude.
Future Cooperation
- Both sides agreed to explore a bilateral financial protocol to improve financing conditions for Israeli exporters.
- There is a reaffirmed commitment to advancing cooperation in fintech innovation, infrastructure development, financial regulation, and digital payment connectivity.
