India-Israel Bilateral Investment Agreement (BIA)

Syllabus: GS2/IR

Context

• India and Israel signed a Bilateral Investment Agreement (BIA).

About

• Israel has become the first OECD (Organisation for Economic Co-operation and Development) member state to sign an investment pact under India’s new model treaty framework.
  • The BIA replaces the earlier investment treaty signed in 1996, which was terminated in 2017 as part of India’s policy overhaul on such agreements. 
  • The Agreement will increase bilateral investments, which presently stands at a total of USD 800 million.
• The new agreement provides protection for investors while promoting cross-border investments in key sectors: innovation, infrastructure development, financial regulation, and digital services.
• The signing of the Agreement reflects both nations’ shared commitment towards enhancing economic cooperation. 

India and Israel Bilateral Relations & Evolving Ties

• Bilateral Relations: India announced its recognition of Israel in 1950. Regular embassies opened in 1992 when full diplomatic relations were established between the two countries. 
  • In 2022-23, the two countries jointly celebrated 30 years of the elevation of bilateral ties to full diplomatic ties.
• Defense & Security: Israel has been a key supplier of advanced technology from AWACS (Airborne Warning and Control System) radars and drones to missile and surveillance systems making it one of India’s largest defense suppliers.
• Bilateral Trade: India is Israel’s 2nd trading partner in Asia and the 7th largest globally.
  • In FY 2023-24 and FY 2024-25 the bilateral trade (excluding defense) was US$ 6.53 billion and US$3.75 billion respectively.
• Investment: During April 2000 – March 2024, Israel’s direct FDI into India was U.S. $334.2 million.
  • There are over 300 investments from Israel in India mainly in the high-tech domain, agriculture and water. 
• Agriculture & Water Management: In 1993, the first Agreement on Cooperation in Agriculture was signed.
  • 2006: Comprehensive Work Plan on Agriculture launched (3-year cycles) – implemented through MASHAV (Israel’s Agency for International Development Cooperation).
  • 2025: Revised Agriculture Cooperation Agreement signed, expanding areas of partnership.
  • The Indo-Israeli Centers of Excellence (CoE) demonstrate Israeli expertise, technologies and innovation in the horticultural field.
• Science, Technology, Counter-Terrorism & Innovation: India-Israel cooperation in Science & Technology (S&T) is overseen by the Joint Committee on S&T, established under the Agreement of Science & Technology cooperation signed in 1993.
  • A US$ 40 million India-Israel Industrial R&D and Technological Innovation Fund (I4F) for joint projects was also set up.
• Multilateral Cooperation: Both are active members of the I2U2 group (India, Israel, USA, UAE), focusing on economic and space collaboration with projects like food parks and space-based environmental tools.

Significance for India

• Defence & security: Israel is a reliable partner for critical technologies for India and can be instrumental in India’s Self Reliance and Make in India.
• Agriculture & water: Israel is known for its model of innovation, water conservation, and high-yield farming, India can adopt these technologies with collaboration.
• Geopolitics: It is an important strategic partner for India in West Asia that complements India’s Act West policy.

Way Ahead

• India–Israel ties are a strategic partnership spanning defence, agriculture, water, innovation, and trade. 
• Defence and agriculture remain the strongest pillars, while cooperation is expanding into new domains like food security, startups, and I2U2 multilateralism.
• The Agreement marks a historic milestone in the relation of two countries.
  • The agreement is expected to boost investments, provide greater certainty and protection for investors.

Source: PIB