India and Israel Finalize Bilateral Investment Treaty to Strengthen Economic and Strategic Relations
India and Israel have taken a significant step towards enhancing their economic relationship by signing a bilateral investment treaty (BIT) on Monday. This agreement aims to fortify economic ties and lays the groundwork for a potential Free Trade Agreement (FTA) in the future. The treaty was signed by India’s Union Finance Minister Nirmala Sitharaman and her Israeli counterpart, Bezalel Smotrich, during Smotrich’s official visit to India.
Details of the Bilateral Investment Treaty
The newly signed BIT is a strategic agreement that marks Israel as the first member of the Organisation for Economic Co-operation and Development (OECD) with which India has formalized such a treaty. The Indian Ministry of Finance announced the signing through a post on social media, highlighting the importance of this agreement in accordance with India’s updated model for investment treaties. The BIT is designed to protect investors from both nations, ensuring fair treatment, non-discrimination, and access to independent arbitration for resolving disputes. It also includes provisions for safeguarding against expropriation, clarifying regulations, facilitating smooth fund transfers, and providing compensation for potential losses.
The negotiations for this treaty were completed prior to Smotrich’s visit, which is part of a broader initiative to deepen economic and financial ties between the two countries. The BIT is expected to create a more robust investment environment, benefiting businesses and economies in both India and Israel.
Official Visit and Future Collaborations
Bezalel Smotrich’s visit to India, which runs from September 8 to 10, includes meetings with several key Indian ministers, including Finance Minister Nirmala Sitharaman, Commerce and Industry Minister Piyush Goyal, and Housing and Urban Affairs Minister Manohar Lal Khattar. His itinerary also features stops in Mumbai and the Gujarat International Finance Tec-City (GIFT City) in Gandhinagar. The primary goal of this visit is to strengthen Israel’s economic ties with India through bilateral discussions and to set the stage for additional agreements, including the anticipated Free Trade Agreement.
This visit marks the fourth ministerial trip from Israel to India in 2025, following earlier visits by Israel’s Tourism, Economy and Industry, and Agriculture Ministers. Such frequent exchanges underscore the growing partnership between the two nations.
Economic Impact and Investment Statistics
India and Israel currently enjoy a strategic partnership, with bilateral trade nearing $4 billion annually. Since 2000, Indian investments in Israel have totaled approximately $443 million, while Israel’s foreign direct investment in India has reached around $334.2 million. The signing of the BIT is expected to pave the way for increased bilateral investments, enhancing economic cooperation between the two countries.
Moreover, both nations are exploring opportunities to collaborate on financing projects through Multilateral Development Banks, such as the World Bank and the Asian Development Bank. They are also looking into joint ventures in third countries, particularly in regions across the Global South. This multifaceted approach to economic collaboration highlights the commitment of both nations to foster a resilient and mutually beneficial investment landscape.
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