The bilateral investment agreement signed between India and Israel on September 8 last year in New Delhi has come into effect from Saturday, the Union Finance Ministry said in a statement.
The statement added that the Bahrain Investment Agreement is a historic step towards strengthening bilateral economic relations and ensuring a safe and predictable investment climate, adding that the Bahrain Investment Agreement was strong in protecting investment and investors 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 evolving jurisprudence of international investment law.
The ministry said that the international investment agreement is expected to contribute to increasing cross-border investment activity and deepening the economic partnership between India and Israel.
The agreement was signed in September 2025 by Union Finance Minister Nirmala Sitharaman and Israeli Finance Minister Bezalel Smotrich in New Delhi. The agreement also included provisions to protect investments from expropriation, ensure transparency and enable smooth transfers and compensation for losses.
The two countries have been negotiating a BIA agreement for several months. According to a Hizb ut-Tahrir report on October 14, 2024, the treaty was aimed at strengthening 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 the previous Bilateral Investment Treaty (BIT) that was signed between India and Israel on January 29, 1996, after the establishment of full bilateral diplomatic relations between the two countries in 1992.
BITs are mutually agreed legal instruments between two countries for fair and equitable treatment of foreign investments on an equal basis with domestic companies. Using the 1993 Model Treaty, India has signed similar agreements with 83 countries by 2015 and 74 of them have been implemented.
However, New Delhi revised the model BIT in 2015. Following the revised text in 2015, the government terminated most of the investment treaties with 77 countries and began renegotiating them.
The officials said that India-Israel economic ties have boomed post Covid-19, and this was reflected in a significant year-on-year jump in merchandise trade until the Hamas terror attack on October 7, 2023, which led to a protracted conflict in the region and disruption of bilateral trade mainly due to deteriorating security situation and trade route disruptions.
