India-Israel ties: Bilateral investment treaty to be signed this week; FTA negotiations next

India and Israel are set to sign a Bilateral Investment Treaty (BIT) during the visit of Israel’s finance minister Bezalel Smotrich later this week, in what is being seen as a step towards laying the groundwork for a free trade agreement (FTA), according to sources.Smotrich will be in India from 8 to 10 September on a three-day official tour. He is expected to hold meetings with finance minister Nirmala Sitharaman, commerce and industry minister Piyush Goyal, and housing and urban affairs minister Manohar Lal Khattar. His itinerary also includes stops in Mumbai and the Gujarat International Finance Tec-City (GIFT City) in Gandhinagar.“The aim of this visit is to deepen Israel’s economic and financial ties with India through bilateral meetings and to prepare common ground for some of the key agreements, including bilateral investment treaty and FTA,” sources told PTI.Negotiations on the draft treaty have already been concluded. “Both the countries have been negotiating a draft bilateral investment treaty and have concluded the negotiations. The finance ministers are expected to sign the BIT during the visit,” they further confirmed.The treaty is designed to safeguard investors from both countries, offering Israeli investors in India and Indian investors in Israel protection in line with global precedents and practices. It aims to raise investor confidence by guaranteeing fair treatment, non-discrimination, and access to independent arbitration for dispute resolution. According to sources, the agreement also ensures protection against expropriation, clarity in regulations, smooth fund transfers, and compensation for potential losses.Since 2000, Israel has signed BITs with more than 15 countries including the UAE, Japan, the Philippines, Thailand and South Africa. “BIT reflects both nations’ shared commitment towards enhancing economic cooperation and creating a more robust and resilient investment environment. The BIT is expected to pave the way for increased bilateral investments, benefiting businesses and economies in both countries,” a source added.This will be the fourth visit to India by an Israeli minister in 2025. Tourism minister Haim Katz, economy and industry minister Nir Barkat, and agriculture and food security minister Avi Dichter have all travelled to the country earlier in the year.India and Israel are recognised strategic partners, with annual bilateral trade standing close to $4 billion. Between 2000 and 2025, cumulative Indian investments in Israel reached $443 million, while Israel contributed $334.2 million in foreign direct investment (FDI) to India.The visit will also see Smotrich tour the International Financial Services Centre (IFSC) at GIFT City, which offers global-standard infrastructure for institutions in banking, insurance, capital markets and funds management. The centre boasts a liberal tax regime, financial incentives, and a strong regulatory framework.The two nations see significant scope for cooperation in the fintech sector, with each bringing complementary strengths. While India offers vast digital infrastructure and financial inclusion platforms such as UPI, Israel leads globally in areas like cybersecurity, blockchain and payment technologies. Sources said such collaboration could drive financial innovation and help build secure, inclusive and scalable fintech ecosystems in both nations.Beyond bilateral trade, India and Israel are also well placed to collaborate in financing projects through Multilateral Development Banks such as the World Bank and the Asian Development Bank, and to support joint ventures in third countries, particularly in the Global South.