India and Israel have formalized a Bilateral Investment Treaty (BIT) in a move designed to strengthen economic ties and pave the way for a potential Free Trade Agreement (FTA). The agreement was signed in New Delhi by Union Finance Minister Nirmala Sitharaman and her Israeli counterpart, Bezalel Smotrich. The Ministry of Finance announced the agreement via a post on social media platform X. Smotrich is on a three-day official visit to India from September 8 to 10.

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.

Smotrich's visit aims 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 the BIT and FTA. During his visit, he is scheduled to meet 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.

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.

The 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. Israel's expertise in high-tech innovation, combined with India's scale and market potential, positions the two nations as natural partners for growth.

Negotiations on the draft treaty were completed before the visit. The treaty seeks to provide protection to Israeli investors in India and Indian investors in Israel in line with international precedents. It is designed to enhance investor confidence by assuring a minimum standard of treatment and non-discrimination, while offering arbitration as an independent forum for dispute resolution.

The expected treaty may offer investors from Israel and India protection based on international norms and promises non-discriminatory minimum treatment and independent arbitration. It follows Israel's earlier BITs with over 15 countries, including the UAE and Japan.