India-Israel Bilateral Investment Agreement Enters into Force
New investment pact provides protection for two-way investments and introduces revised provisions for dispute resolution and portfolio investments.
The India-Israel Bilateral Investment Agreement (BIA) officially came into force on Saturday, July 4, 2026, following its signing by the two countries on September 8 last year, the Finance Ministry said.
According to the ministry, the agreement is designed to provide protection for two-way investments and establish a more secure and predictable investment climate between India and Israel. It is also expected to contribute to increased cross-border investment activity.
The ministry stated, “The BIA between the Government of the Republic of India and the Government of the State of Israel… enters into force with effect from today, 04 July 2026.”
Under the agreement, India has reduced the local remedies exhaustion period for Israeli investors to three years. The local remedies exhaustion requirement requires investors to first seek resolution through the legal system of the host country before initiating international arbitration. India's earlier investment treaty framework generally prescribed a five-year period.
The India-Israel BIA also includes portfolio investments, marking a departure from India's earlier investment treaties. Israel becomes the first OECD (Organisation for Economic Co-operation and Development) member with which India has signed an agreement containing this provision.
The agreement is expected to facilitate higher bilateral investment flows between the two countries. According to the report, India received $371.35 million in foreign direct investment from Israel between April 2000 and March 2026.
The implementation of the agreement comes as India and Israel continue negotiations on a Free Trade Agreement (FTA). The report notes that discussions have progressed slowly due to the West Asia crisis.
India is also negotiating bilateral investment treaties with several countries, including Saudi Arabia, Qatar, Oman, Switzerland, Russia, Australia and the European Union. The government has previously stated that it is updating its bilateral investment treaty framework to make it more investor-friendly and attract foreign investment.
Commenting on the agreement, Global Trade Research Initiative (GTRI) Founder Ajay Srivastava said the 2015 model text treaty excluded portfolio investments, whereas the India-Israel agreement covers shares, stocks and other equity holdings, qualifying bonds, loans and other corporate debt.
He said, “This could widen India's exposure to investor-state disputes beyond traditional foreign direct investment to certain financial investments.”
Srivastava also noted that the agreement allows investors to seek international arbitration after pursuing domestic legal remedies for three years, compared with five years under India's 2015 Model BIT and several subsequent treaties.
He added that the agreements signed with the UAE and Israel indicate that India is providing investors with faster access to international arbitration.
Regarding investment coverage, he said, “The agreement provides national treatment to all sectors except land and real estate,” adding that the exclusion enables both governments to maintain separate rules for foreign investors in those sectors. He further stated that national treatment requires each country to treat investors from the other country no less favourably than domestic investors in like circumstances.
Both the BIA and BITs are binding agreements between countries that provide legal protection for investments and investors from each country operating in the other.