India–Israel Bilateral Investment Treaty: A Strategic Bet Beyond Economics
By Sanjeev Oak
India and Israel’s Bilateral Investment Treaty marks a turning point—moving beyond defence and agriculture into structured economic trust. By securing investor rights and opening pathways to a future Free Trade Agreement, it signals ambition, credibility, and a deeper strategic partnership.
When India and Israel moved to seal a Bilateral Investment Treaty (BIT), it was not merely an economic announcement. It was a statement of intent—about trust, technology, and a shared stake in each other’s future. For India, Israel becomes the first Western-oriented OECD country to sign on to its updated BIT framework. For Israel, it is a gateway into one of the world’s fastest-growing economies with a rules-based guarantee for its investors.
Why This Treaty Matters
The BIT provides investors with clear protections—against expropriation, arbitrary policy swings, and barriers to profit transfers. It builds in independent arbitration mechanisms, a feature that enhances confidence for global capital.
“For global investors, predictability matters as much as profit. The India–Israel BIT offers both.”
At its core, the treaty seeks to de-risk investment flows. For India, which has had to defend against arbitration disputes with multinational firms in the past, this model is about striking a balance: offering investor protection without ceding sovereign policy space.
A Long Road to Here
India once had over 80 bilateral investment treaties. Many were terminated after disputes arose under clauses seen as skewed in favour of foreign investors. Since 2016, New Delhi has sought to rebuild this network under a new model that retains sovereign control but reassures partners.
That Israel is the first OECD country to sign on is significant. It signals confidence not just in India’s economy, but in the credibility of its revised treaty template.
“This is less about signatures on paper and more about the signal it sends: that India’s doors are open, but on fairer, clearer terms.”
Beyond Economics: Strategic Convergence
India–Israel ties have long rested on three pillars: defence, intelligence, and agriculture. Israel supplies around 40% of its defence exports to India, from surveillance drones to missile systems. It has also partnered on water management and precision farming projects.
The BIT adds a new layer—structured investment flows. Economic synergy now complements military and technological convergence.
Toward a Free Trade Agreement
The natural next step is a Free Trade Agreement (FTA). Both sides have been in talks for years. By clearing the BIT first, the pathway to an FTA becomes smoother.
“Think of the BIT as the foundation stone; the FTA will be the architecture that rises upon it.”
Such an agreement could dramatically expand the modest $4 billion bilateral trade figure, unlocking new opportunities in digital technologies, defence co-production, and renewable energy.
Opportunities and Challenges
The BIT could encourage Israeli tech firms, known for innovation in cyber security and AI, to set up base in India. Conversely, Indian pharma, IT, and agritech companies could find safer footing in Israel’s advanced markets.
But implementation remains the litmus test. India must ensure its regulatory environment stays predictable. Equally, Israel must guarantee that investor protections do not end up being symbolic alone.
“The risk is not in signing treaties. It is in making sure they work beyond press releases.”
The Bigger Picture
This treaty also carries a geopolitical undertone. For Israel, deepening ties with India diversifies its Asian footprint beyond defence contracts. For India, aligning with Israel sends a message that its economic diplomacy is now as ambitious as its strategic posture.
It is not lost on observers that India is simultaneously negotiating BITs with Saudi Arabia, Russia, and the EU. Israel, however, represents the bridge—between the West and Asia, between high technology and emerging market scale.
From Transactional to Transformational
The India–Israel BIT is not just an economic milestone. It is an inflection point in the bilateral relationship. If followed by an FTA and backed by credible implementation, it could mark the shift from transactional exchanges to a truly transformational partnership.
“For India, this is about more than investment. It is about credibility. For Israel, it is about scale. Together, it is about shaping a future anchored in trust.”