Brief Context
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.
Source Content
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.
| Organisation for Economic Co-operation and Development (OECD) – It is an international organisation of 38 countries committed to democracy and the market economy. – Founded: In 1961 (evolved from the OEEC – Organisation for European Economic Co-operation, 1948, which was created to administer the Marshall Plan after WWII). – Headquarters: Paris, France. – Motto: “Better Policies for Better Lives”. – Official Languages: English and French. |
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