India-Israel Investment Pact Comes Into Force, Here's What It Means for Businesses

The India-Israel Bilateral Investment Agreement (BIA) officially came into force on Saturday, marking a significant step in strengthening economic ties between the two countries and providing a modern framework for cross-border investments.

India and Israel signed the agreement on September 8, 2025, after years of negotiations. Israel also becomes the first member of the Organisation for Economic Co-operation and Development (OECD) to conclude a bilateral investment treaty with India under the country's revised investment treaty framework.

According to a Finance Ministry statement, the agreement is designed to provide strong protection for investors and their investments while preserving the government's ability to pursue legitimate public policy objectives.

"The BIA is 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 the modern principles and evolving jurisprudence of international investment law," the ministry said.

The agreement includes provisions to safeguard investments against unlawful expropriation, promote regulatory transparency, facilitate the free transfer of capital and lay down mechanisms for compensation in case of losses.

At the same time, it seeks to ensure that governments retain adequate regulatory autonomy to frame and implement policies in the public interest.

The treaty also guarantees a minimum standard of treatment for foreign investors and establishes a transparent dispute resolution mechanism, allowing investment-related disputes between investors and the host state to be resolved through independent arbitration.

Bid For Investor Confidence

The government expects the agreement to encourage greater investor confidence and improve the ease of doing business between the two countries by providing legal certainty and a predictable investment environment.

According to an earlier Finance Ministry statement, bilateral investment flows between India and Israel currently stand at around $800 million. Officials expect the agreement to significantly increase cross-border investment by reducing regulatory uncertainty and encouraging businesses to expand operations in both markets.

The Finance Ministry said the agreement is "expected to contribute to increased cross-border investment activity and further deepen the economic partnership between India and Israel," reinforcing the two countries' growing strategic and economic relationship.