India–Israel Investment Pact Comes Into Force, Set to Boost Cross-Border Capital Flows

The India–Israel Bilateral Investment Agreement (BIA) officially came into force on July 4, marking a new milestone in economic relations between the two countries.

Signed on September 8, 2025, the agreement is designed to strengthen bilateral investment flows while providing a secure and predictable environment for businesses operating across both nations.

According to a statement from the finance ministry, the agreement offers strong protection to investors and their investments while also ensuring that governments retain sufficient policy space to pursue legitimate public policy objectives.

It reflects modern principles of international investment law, balancing investor rights with sovereign regulatory authority.

The BIA is expected to encourage greater cross-border investment activity and deepen overall economic engagement between India and Israel.

Notably, Israel is the first Organisation for Economic Co-operation and Development (OECD) member country to sign such a strategic investment agreement with India.

The pact includes provisions safeguarding investments against expropriation, ensuring transparency in regulatory processes, and enabling smooth transfer of funds and compensation in case of losses.

It also establishes a minimum standard of treatment for investors and introduces an independent dispute resolution mechanism through arbitration, thereby improving investor confidence.

At present, total bilateral investment between India and Israel stands at approximately $800 million. The agreement is expected to significantly expand this figure by creating a more stable and predictable investment environment.

Under the agreement, investors will be allowed to freely transfer funds between the two countries, including profits, dividends, capital gains, sale proceeds, interest, royalties, and technical fees. These transfers will be made in the original investment currency or any convertible currency at prevailing market exchange rates.

However, the agreement excludes several areas from its scope, including measures taken by local governments, taxation-related laws and enforcement actions, government procurement, and subsidies or grants provided by either country.

With both India and Israel focusing on technology-led growth and resilient supply chains, the agreement is also expected to promote cooperation in emerging sectors such as deep technology, artificial intelligence, and defence manufacturing, strengthening strategic economic ties between the two nations.