India and Israel have taken a significant step to strengthen their economic partnership by signing a landmark Bilateral Investment Agreement (BIA) in New Delhi. The pact, inked on September 8, 2025, by India's Finance Minister Nirmala Sitharaman and Israel's Finance Minister Bezalel Smotrich, is designed to encourage and protect investments between the two nations, creating a more secure and predictable environment for investors from both sides.

This agreement is historically notable as Israel becomes the first member of the Organisation for Economic Co-operation and Development (OECD) to sign such a treaty with India under the country's new investment framework. The BIA replaces a prior agreement from 1996 and is expected to pave the way for increased bilateral trade and investments, currently valued at approximately USD 800 million. It promises to safeguard investments by guaranteeing protections against expropriation, ensuring transparency, and providing an independent arbitration mechanism for dispute resolution.

The signing comes amid plans to expand cooperation in key growth areas such as innovation, infrastructure, financial regulation, and digital services. Both ministers emphasized the potential for boosting economic ties further, underlining mutual benefits and stronger business confidence due to the agreement. Minister Smotrich highlighted that this pact opens new avenues for Israeli and Indian investors alike and strengthens exports and economic collaboration between fast-growing markets.

This agreement also comes at a critical juncture for Israel amidst some global economic headwinds, underscoring the importance of deepening ties with India as a strategic economic partner. Besides the immediate focus on investment flows, this treaty is laying groundwork for possible future collaboration such as a Free Trade Agreement, helping cement a long-term commercial relationship between the two democracies.

For Indian investors, the new framework provides greater certainty and protection in Israel, encouraging participation in sectors aligned with India’s economic agenda, including the 'Make in India' initiative, which Israel has strongly supported through collaborative ventures. This alliance not only solidifies direct investment but also enhances cooperative ventures in technology, infrastructure, and innovation that benefit both economies.