India-Israel Investment Pact

Context:

India and Israel signed a new Bilateral Investment Agreement to enhance reciprocal investments and economic cooperation.

Bilateral Investment Agreement (BIA):

The new BIA replaces the 1996 agreement and follows India’s new model for investment treaties.
It aims to facilitate reciprocal investments between Indian and Israeli investors, providing legal certainty and tools for business operations.
This is the first BIA India has signed with an OECD member, signaling a strategic economic outreach.

Strategic and Economic Implications

Strengthens trade and investment ties, particularly in sectors like construction, technology, and defence-linked innovation.
Opens opportunities for Israeli exports and Indian workforce participation in Israel, especially in blue-collar jobs.
Enhances India’s position as a fast-growing global market for Israeli investment.

Geopolitical Context

The visit coincides with the intensification of Israeli military operations in Gaza, highlighting Israel’s diplomatic balancing to maintain international economic partnerships.
Despite restrictions on Israeli Minister Bezalel Smotrich in other countries, India hosted him, reflecting strengthened bilateral relations.
The agreement aligns with India’s economic diplomacy and the strategy to diversify foreign investment partners.