India-Israel BIA decoded: What's in it for businesses and investors?
The India-Israel Bilateral Investment Agreement (BIA), signed in September 2025, has come into force from July 4, 2026, replacing the nearly three-decade-old investment treaty between the two countries. The new pact seeks to boost cross-border investments by offering stronger investor protection while preserving the governments' right to regulate in the public interest.
Business Today Desk
- Jul 4, 2026,
- Updated Jul 4, 2026 2:07 PM IST
The Bilateral Investment Agreement (BIA) between the Government of India and the Government of the State of Israel, signed on September 8, 2025, in New Delhi, came into force on July 4, 2026, marking a major step in strengthening bilateral economic ties and creating a more predictable investment environment between the two countries.
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The agreement seeks to provide robust protection to investments and investors while preserving each country's sovereign right to regulate in pursuit of legitimate public policy objectives. It is also expected to encourage greater cross-border investment and deepen the India-Israel economic partnership.
The 1996 investment treaty
The new BIA replaces the India-Israel Bilateral Investment Treaty (BIT), 1996, aligning the investment framework with India's revised Model Bilateral Investment Treaty and contemporary international investment law. The agreement applies to both existing investments and new investments admitted under the laws of either country.
Stronger investor protection
A key feature of the agreement is its attempt to balance investor protection with governments' regulatory powers.
The treaty protects investors against denial of justice, fundamental breaches of due process, targeted discrimination and manifestly arbitrary treatment. At the same time, it explicitly reaffirms that both India and Israel retain the right to regulate investments in areas such as public health, environmental protection and other legitimate public policy objectives. Regulatory measures that may affect an investor's profits do not automatically amount to a treaty violation.
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Equal treatment for investors
The agreement provides National Treatment, requiring both countries to treat investors from the other country no less favourably than domestic investors in similar circumstances. However, the provision does not extend to rights over land and real estate.
Protection against expropriation
The BIA safeguards investors from direct or indirect expropriation. Investments can be acquired by the state only for a public purpose, in accordance with due process, on a non-discriminatory basis and against prompt and adequate compensation. The agreement also lays down detailed criteria for determining whether indirect expropriation has occurred.
Easier movement of investment funds
The treaty permits investors to freely transfer capital, profits, dividends, royalties, capital gains and proceeds from the sale or liquidation of investments. However, both governments retain the right to impose temporary restrictions during balance-of-payments crises or exceptional macroeconomic situations, subject to their domestic laws.
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Greater transparency and investor obligations
The BIA requires both governments to publish investment-related laws, regulations and administrative measures and, wherever possible, provide opportunities for stakeholder comments before introducing new measures.
At the same time, investors are required to comply with domestic laws, including taxation, anti-corruption provisions and disclosure requirements. The treaty also bars investors from offering undue benefits to public officials and allows governments to seek investment-related information for regulatory purposes.
New dispute resolution framework
The agreement introduces a structured investor-state dispute settlement mechanism but places greater emphasis on resolving disputes through domestic legal systems first.
Investors must first approach domestic courts or administrative bodies before initiating international arbitration, except in limited circumstances where local remedies are unavailable. The treaty also mandates a six-month consultation period before arbitration can begin and prohibits third-party funding of investment disputes. Eligible disputes may proceed under ICSID or UNCITRAL arbitration rules after meeting the prescribed conditions.
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What it means for businesses
For businesses and institutional investors, the BIA provides greater legal certainty over investments while reducing the risk of arbitrary state action. By combining investor safeguards with clearly defined regulatory powers for governments, the agreement aims to foster long-term investment flows between India and Israel across sectors such as technology, manufacturing, innovation, agriculture and infrastructure.
The updated framework also reflects India's evolving investment treaty policy, which seeks to protect foreign investment without compromising the government's ability to pursue domestic policy priorities. With the agreement now in force, businesses in both countries are expected to benefit from a more stable and transparent investment regime.
The Bilateral Investment Agreement (BIA) between the Government of India and the Government of the State of Israel, signed on September 8, 2025, in New Delhi, came into force on July 4, 2026, marking a major step in strengthening bilateral economic ties and creating a more predictable investment environment between the two countries.
Advertisement
The agreement seeks to provide robust protection to investments and investors while preserving each country's sovereign right to regulate in pursuit of legitimate public policy objectives. It is also expected to encourage greater cross-border investment and deepen the India-Israel economic partnership.
The 1996 investment treaty
The new BIA replaces the India-Israel Bilateral Investment Treaty (BIT), 1996, aligning the investment framework with India's revised Model Bilateral Investment Treaty and contemporary international investment law. The agreement applies to both existing investments and new investments admitted under the laws of either country.
Stronger investor protection
A key feature of the agreement is its attempt to balance investor protection with governments' regulatory powers.
The treaty protects investors against denial of justice, fundamental breaches of due process, targeted discrimination and manifestly arbitrary treatment. At the same time, it explicitly reaffirms that both India and Israel retain the right to regulate investments in areas such as public health, environmental protection and other legitimate public policy objectives. Regulatory measures that may affect an investor's profits do not automatically amount to a treaty violation.
Advertisement
MUST READ: India sets $1 trillion export target for FY27, eyes 17% growth in merchandise exports
Equal treatment for investors
The agreement provides National Treatment, requiring both countries to treat investors from the other country no less favourably than domestic investors in similar circumstances. However, the provision does not extend to rights over land and real estate.
Protection against expropriation
The BIA safeguards investors from direct or indirect expropriation. Investments can be acquired by the state only for a public purpose, in accordance with due process, on a non-discriminatory basis and against prompt and adequate compensation. The agreement also lays down detailed criteria for determining whether indirect expropriation has occurred.
Easier movement of investment funds
The treaty permits investors to freely transfer capital, profits, dividends, royalties, capital gains and proceeds from the sale or liquidation of investments. However, both governments retain the right to impose temporary restrictions during balance-of-payments crises or exceptional macroeconomic situations, subject to their domestic laws.
Advertisement
Greater transparency and investor obligations
The BIA requires both governments to publish investment-related laws, regulations and administrative measures and, wherever possible, provide opportunities for stakeholder comments before introducing new measures.
At the same time, investors are required to comply with domestic laws, including taxation, anti-corruption provisions and disclosure requirements. The treaty also bars investors from offering undue benefits to public officials and allows governments to seek investment-related information for regulatory purposes.
New dispute resolution framework
The agreement introduces a structured investor-state dispute settlement mechanism but places greater emphasis on resolving disputes through domestic legal systems first.
Investors must first approach domestic courts or administrative bodies before initiating international arbitration, except in limited circumstances where local remedies are unavailable. The treaty also mandates a six-month consultation period before arbitration can begin and prohibits third-party funding of investment disputes. Eligible disputes may proceed under ICSID or UNCITRAL arbitration rules after meeting the prescribed conditions.
Advertisement
MUST READ: The geography of Japan's ₹1 lakh crore investments: Which Indian states are winning?
What it means for businesses
For businesses and institutional investors, the BIA provides greater legal certainty over investments while reducing the risk of arbitrary state action. By combining investor safeguards with clearly defined regulatory powers for governments, the agreement aims to foster long-term investment flows between India and Israel across sectors such as technology, manufacturing, innovation, agriculture and infrastructure.
The updated framework also reflects India's evolving investment treaty policy, which seeks to protect foreign investment without compromising the government's ability to pursue domestic policy priorities. With the agreement now in force, businesses in both countries are expected to benefit from a more stable and transparent investment regime.
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