India and Israel have formalized a Bilateral Investment Treaty (BIT) aimed at strengthening economic ties and paving the way for a potential Free Trade Agreement (FTA). The agreement was signed in New Delhi by India's Finance Minister Nirmala Sitharaman and her Israeli counterpart, Bezalel Smotrich.

The treaty is designed to protect 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, who is on a three-day official visit to India, hailed the agreement as a "strategic step" that will open new doors for both Israeli and Indian investors, strengthen Israeli exports, and provide businesses on both sides with certainty and tools to develop in the world's fastest-growing markets. He noted that India is a growing economic power, and cooperation with it is a tremendous opportunity for Israel.

India's Finance Ministry stated on X (formerly Twitter) that the agreement is expected to pave the way for increased bilateral investments, benefiting businesses and economies in both countries. The ministry also emphasized the commitment to advancing economic cooperation in areas such as fintech innovation, infrastructure development, financial regulation, and digital payment connectivity.

Israel's finance ministry said that Israel is the first OECD (Organisation for Economic Co-operation and Development) member state with which India has signed this strategic agreement, in accordance with India's new model for investment treaties.

The agreement comes as some countries are threatening to cut back economic ties with Israel, and large global investment funds are divesting Israeli assets.

Annual bilateral trade between India and Israel stands 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. In 2024, the bilateral trade volume reached about $5 billion, including $2.5 billion in Israeli exports, $1 billion in diamond trade, and $1.5 billion in imports from India to Israel. 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. It is expected to pave the way for increased bilateral investments, benefiting businesses and economies in both countries.

This marks the fourth ministerial visit from Israel to India in 2025, with previous visits from the tourism minister, economy and industry minister, and agriculture and food security minister.