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India, Israel ink bilateral treaty to promote, protect investments
The agreement was signed by Union finance minister Nirmala Sitharaman and Israeli finance minister Bezalel Smotrich, the finance ministry said in a post on X
India and Israel on Monday signed a Bilateral Investment Treaty (BIT) in New Delhi, which aims to promote and protect foreign private investments in each other’s territories.
The agreement was signed by Union finance minister Nirmala Sitharaman and Israeli finance minister Bezalel Smotrich, the finance ministry said in a post on X. “Bilateral Investment Treaty btw Israel & India just signed!,” added Ambassador of Israel to India Reuven Azar, also on X.
“Agreement is expected to provide greater certainty and protection for investors, facilitating growth of trade and mutual investments by ensuring a minimum standard of treatment, and an independent dispute resolution mechanism through arbitration,” the Indian finance ministry said in a statement. Agreement also includes provisions to safeguard investments against expropriation, ensure transparency, and enable smooth transfers and compensation for losses, it added.
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The two countries have been negotiating a BIT for several months. According to a Hindustan Times report on October 14, 2024, the treaty was aimed at boosting 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 an earlier BIT that was signed between India and Israel on January 29, 1996 after full bilateral diplomatic relations between the two nations were established in 1992.
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Bilateral investment treaties are mutually agreed legal instruments between two countries for fair and equitable treatment of foreign investments on a par with domestic firms. Using the model treaty of 1993, India had signed pacts with 83 countries till 2015 and 74 of these were enforced. New Delhi, however, revised the model BIT in 2015. After the revised text of 2015, the government terminated most of the investment treaties with 77 countries and started renegotiating them.
Officials said India-Israel economic relations flourished post-Covid and that was reflected in a significant year-on-year jump in merchandise trade until Hamas’s terror attack on October 7, 2023, which led to a prolonged conflict in the region and disrupted the bilateral trade mainly due to a deteriorating security situation and trade route disturbances.
Bilateral merchandise trade (other than defence-related items) between India and Israel, which was about $4.66 billion in 2020-21, jumped 68.67% to $7.86 billion in 2021-22, according to official data. The annualised growth continued in the subsequent year to $10.77 billion, posting a nearly 37% jump on a high base. But, that was the peak. Bilateral trade, thereafter, contracted by about 24% the following year (2023-24) to $6.53 billion due to geopolitical disturbances after the terror attack in Israel, and the ensuing war. In 2024-25, it further plunged to about $3.7 billion.
“The economic relationship with Israel is important because the balance of bilateral trade is always in favour of India, which is Israel’s second-largest trading partner in Asia,” a person familiar with the matter said requesting anonymity.
According to government data, between April 2000 and March 2024, Israel’s direct foreign direct investment into India was $334.2 million. There are over 300 investments from Israel in India mainly in the high-tech domain, agriculture and water.
These investments are varied in nature such as manufacturing plants, research and development centers, subsidiaries, joint ventures and technology partnerships with an emphasis on local manufacturing, according to a factsheet compiled up to June , on the website of Embassy of India in Tel Aviv. “Israeli defence companies are increasingly looking to Make-in-India through collaborations and acquisitions,” it said.
“There is a growing preference for Israeli companies in sectors such as renewable energy, water technologies, homeland security, aerospace, defence, health and real estate in addition to traditional areas such as agriculture, cyber, chemicals, etc,” it added.
Teva Pharmaceuticals, Ecoppia, Naa’n Dan Jain, Aqwise, Polemix, Eli Hajaj, Rivulis, Alumayer, Plasson, Huliot, Metzerplas, Avgol, IDE, Netafim, ADAMA, Mellanox, Dan Hotels, Watergen, Rivulis, Delta Galil, and Tadiran Telecom are among the leading Israeli companies which have notable investments in India, the fact sheet said.
Indian companies invested $443 million in Israel between April 2000 and April 2025, it said citing official data. “Indian companies are marking their presence in Israel through mergers and acquisitions and by opening branch offices,” it said. TCS, State Bank of India, Sun Pharma, Infosys, Tech Mahindra, Wipro Infrastructure Engineering, Lohia Group and Adani Group are some major Indian companies which have investments in Israel, it said.
In 2022, a consortium led by India’s Adani Ports and Special Economic Zone Ltd (APSEZ) acquired the rights to operate the Haifa Port Company Ltd from the Government of Israel with an overall investment of $1.18 billion, it said.
Major Indian companies are also making a mark in the Israeli innovation ecosystem. Tata Group, Wipro, Sun Pharma, Reliance Industries, L&T Technology, Samvardhana Motherson, Ola Electric are some of the major Indian firms that have made notable investments in Israeli startups directly or indirectly through venture capital firms or academic institutions.
In March 2021, state-run Indian Oil Corporation (IOC) launched a joint venture with Israel’s Phinergy to manufacture aluminium-air battery systems in India and promote green mobility through the development of fuel cells and indigenous hydrogen storage solutions, it said. In February 2024, Indian Oil increased its stake in Phinergy with fresh investment thereby bringing its total investment to $25 million, it added.
In June 2024, Sun Pharmaceutical Industries announced the complete merger of Israel’s Taro Pharmaceutical Industries Ltd with its subsidiary, making the Israeli company wholly-owned by Sun Pharma. In September 2024, Samvardhana Motherson made a strategic investment of $15 million in REE Automotive Ltd, an Israeli company developing electric vehicle (EV) platforms, the fact sheet said.
