India-Israel Bilateral Investment Agreement comes into force on July 4

• The India-Israel Bilateral Investment Agreement (BIA) came into force on July 4.

• The BIA is a landmark step towards strengthening bilateral economic relations and ensuring a secure and predictable investment climate.

• It was signed on September 8, 2025 in New Delhi.

Highlights of BIA:

• 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.

• It is expected to contribute to increased cross-border investment activity and further deepen the economic partnership between India and Israel.

• The agreement includes provisions to safeguard investments against expropriation, ensure transparency, and enable smooth transfers and compensation for losses. 

• At the same time, it carefully balances investor protection with the State’s regulatory rights, preserving sufficient policy space for sovereign governance.

• Under the pact, India has cut down the local remedies exhaustion period for Israeli investors to three years.

• Local remedies exhaustion means that investors must first try to resolve their disputes using the legal system of the host country before they can take the matter to international arbitration. Normally, India keeps a five-year period for this.

• The India-Israel BIA also includes portfolio investments in a deviation from such treaties in the past. 

• Israel is the first OECD (Organisation for Economic Co-operation and Development) member with which India has inked this agreement.

• The agreement is expected to pave the way for increased bilateral investments between the two countries. 

• During April 2000 and March 2026, India received $371.35 million Foreign Direct Investment (FDI) from Israel.

• The implementation of the pact is important as both countries are also negotiating a free trade pact.

(The author is a trainer for Civil Services aspirants.)