India and Israel have long shared a partnership that extends beyond diplomacy into defence, technology, and agriculture. What began as a security-oriented relationship has gradually evolved into one where economics and innovation stand as equal pillars. Over the past decade, New Delhi and Tel Aviv have sought to complement each other’s strengths—India’s large market and growth potential on one hand, and Israel’s expertise in technology and innovation on the other. This synergy has opened pathways for deeper trade, mutual investments, and collaborative projects across sectors.
On 8 September 2025, India and Israel formalised a new Bilateral Investment Treaty (BIT), replacing the earlier 1996 framework that India had scrapped in 2017. The signing ceremony in Jerusalem was attended by India’s Finance Minister Nirmala Sitharaman and her Israeli counterpart, Bezalel Smotrich, with senior officials present. Smotrich described India as “a developing economic powerhouse” and emphasised that closer cooperation represents a tremendous opportunity for Israel’s economy.
This treaty is not merely symbolic; it establishes a stable and transparent framework for cross-border investments. Investors on both sides will now benefit from safeguards against expropriation, fair treatment provisions, and arbitration mechanisms—key measures designed to inspire confidence in uncertain times.
Why Now?
The timing of the treaty is telling. Israel is facing geopolitical turbulence due to the Gaza conflict, prompting some investors to scale back. For India, global economic headwinds and shifting supply chains have underscored the need to diversify its investment partners. Signing the pact signals that both nations are committed to deepening cooperation despite regional and international pressures.
Bilateral investment between the two countries stood at around $800 million in 2024, far lower than their trade volume of $4 billion. By offering legal certainty and fostering investor confidence, the treaty could bridge this gap. Combined with ongoing discussions about a Free Trade Agreement (FTA), trade and investment flows are expected to grow substantially.
High-Tech and Strategic Sectors of Focus
The new agreement prioritises several sectors of mutual strength:
· Fintech: Both nations are working to scale secure, innovative financial ecosystems.
· Cybersecurity and Defence: Building on their strategic partnership, greater joint ventures in security technologies are anticipated.
· Technology and Innovation: Areas such as AI, drones, and advanced medical devices are earmarked for collaboration.
· Infrastructure: Following Adani’s acquisition of Haifa Port in 2022, opportunities in rail, metro, and logistics systems are emerging.
Agriculture and Water Management
Agriculture has historically been a key area of Indo-Israel collaboration. Israel’s innovations in precision farming and water-use efficiency have been adapted to Indian conditions through Centres of Excellence under the Indo-Israel Agricultural Project (IIAP). A 2023 agreement established an Agricultural Innovation Centre to accelerate this process further.
Water management is another critical frontier. With desalination, wastewater recycling, and atmospheric water generation, Israel offers solutions to India’s pressing water challenges. The IIT Madras–Israel Centre of Water Technology exemplifies this synergy, aiming to create sustainable water management models for India’s future.
Renewable Energy and Space Cooperation
Energy diversification also features prominently. Through the I2U2 grouping (India, Israel, UAE, and the US), a hybrid renewable project in Gujarat is already underway. Israeli firms are partnering with Indian companies in green technologies, including aluminium-air batteries for mobility.
In space technology, liberalised FDI rules in India have opened doors for collaboration. Israel Aerospace Industries’ NeuSPHERE programme, launched in 2024, funds Indian startups in aerospace, indicating the scope for joint ventures in satellites, launch vehicles, and space services.
Medical and Automotive Innovations
Healthcare and medical technology are rising sectors of cooperation. Israeli investments in Indian healthcare, coupled with India’s pharmaceutical strength, create avenues for research and affordable innovation. Similarly, in the automotive sector, Israel’s ecosystem of 800-plus mobility startups could become vital partners for India’s fast-growing auto industry. At the ACMA summit in September 2025, Israel’s envoy in Delhi stressed the potential for co-developing smart mobility solutions.
A Constructive Way Forward
The India–Israel Bilateral Investment Treaty is more than a legal agreement; it is a strategic instrument that strengthens trust and diversifies opportunities. For India, it represents a chance to access cutting-edge innovation while offering its vast market and skilled workforce. For Israel, it provides stability and a bridge into one of the world’s fastest-growing economies.
Looking ahead, the challenge lies in translating this pact into tangible outcomes—expanding trade, fostering joint ventures, and nurturing startups that can benefit from this framework. With parallel developments in agriculture, water, defence, space, and healthcare, the treaty provides a strong foundation for a multi-dimensional partnership.
Ultimately, the agreement underscores a shared vision: to transform strategic friendship into a driver of economic resilience, technological advancement, and sustainable growth. At a time of global uncertainties, the India–Israel partnership shines as an example of how nations can build enduring bonds rooted in mutual benefit and long-term trust.
(With agency inputs)
