With an aim to ensure a secure and predictable investment climate between the India and Israel, the Finance Ministry has said that the India-Israel Bilateral Investment Agreement (BIA) came into force on July 4. 2026. The pact, which provides protection for two-way investments, is likely to boost cross-border investment activity. India and Israel had signed the agreement on September 8, 2025.
Under the agreement, India has reduced the local remedies exhaustion period for Israeli investors to three years from the standard five years. Local remedies exhaustion requires investors to first seek resolution of disputes through the host country's legal system before approaching international arbitration.
In a departure from India's previous bilateral investment treaties, the India-Israel BIA also covers portfolio investments. Israel is the first member of the Organisation for Economic Co-operation and Development (OECD) with which India has signed such an agreement. The pact is likely to facilitate higher bilateral investment flows. Between April 2000 and March 2026, India received foreign direct investment (FDI) worth $371.35 million from Israel.
The implementation of the agreement is significant as the two countries are also negotiating a free trade agreement (FTA). However, the talks have progressed slowly due to the West Asia crisis. Meanwhile, India is simultaneously negotiating bilateral investment treaties with several other countries, including Saudi Arabia, Qatar, Oman, Switzerland, Russia, Australia, and the European Union. These treaties are aimed at protecting and promoting investments in each other's markets.
