India-Israel ties: Bilateral investment treaty sealed; step towards deeper economic and strategic relations

India and Israel on Monday sealed a bilateral investment treaty, in a move aimed towards strengthening economic ties and laying the groundwork for a possible Free Trade Agreement (FTA).The Government of India and the State of Israel formalised the BIT with Union finance minister Nirmala Sitharaman and her Israeli counterpart, HE Bezalel Smotrich, signing the agreement.The ministry of finance made the announcement via a post on social media platform X.“The Government of India and Government of the State of Israel sign Bilateral Investment Agreement #BIT in New Delhi, today,” the ministry said.Israel's finance ministry, as cited by ANI said, "Israel is the first OECD (Organisation for Economic Co-operation and Development) member state with which India has signed this strategic agreement, in accordance with India's new model for investment treaties."

Smotrich is on a three-day official tour from 8 to 10 September. During his visit, he is expected to hold talks with finance minister Nirmala Sitharaman, commerce and industry minister Piyush Goyal, and housing and urban affairs minister Manohar Lal Khattar.

His itinerary also includes stops in Mumbai and the Gujarat International Finance Tec-City (GIFT City) in Gandhinagar.According to sources cited by PTI, “The aim of this visit is to deepen Israel's economic and financial ties with India through bilateral meetings and to prepare common ground for some of the key agreements, including bilateral investment treaty and FTA.”Negotiations on the draft treaty were already completed before the visit. The treaty is designed to safeguard investors from both countries, offering protection in line with global precedents and practices. It guarantees fair treatment, non-discrimination, and access to independent arbitration for dispute resolution. Provisions also cover protection against expropriation, clarity in regulations, smooth fund transfers, and compensation for potential losses, as per PTI.Since 2000, Israel has signed BITs with over 15 countries, including the UAE, Japan, the Philippines, Thailand, and South Africa.

“BIT reflects both nations' shared commitment towards enhancing economic cooperation and creating a more robust and resilient investment environment. The BIT is expected to pave the way for increased bilateral investments, benefiting businesses and economies in both countries,” a source told PTI.This marks the fourth ministerial visit from Israel to India in 2025. Tourism minister Haim Katz, economy and industry minister Nir Barkat, and agriculture and food security minister Avi Dichter have all travelled to India earlier this year.India and Israel are strategic partners, with annual bilateral trade standing at nearly $4 billion. Between 2000 and 2025, Indian investments in Israel reached $443 million, while Israel’s foreign direct investment in India amounted to $334.2 million.The two nations are also exploring ways to collaborate on financing projects through Multilateral Development Banks like the World Bank and the Asian Development Bank, and in pursuing joint ventures in third countries, particularly across the Global South.