Israel and India ink bilateral investment deal in New Delhi to foster trade ties

Israel and India signed a bilateral agreement on Monday to facilitate mutual investment flows and encourage economic cooperation and trade between the two countries.

The bilateral investment agreement was signed in New Delhi in the presence of Finance Minister Bezalel Smotrich and his Indian counterpart Nirmala Sitharaman to bolster investor confidence and support smoother financial interactions between the two nations. The two finance heads agreed to advance economic cooperation in the fields of innovation, infrastructure development, financial regulation, and digital services trading.

“This is a strategic step that will open new doors for both Israeli and Indian investors, strengthen Israeli exports, and provide businesses on both sides with certainty and tools to develop in the world’s fastest-growing markets,” said Smotrich. “India is a growing economic power, and cooperation is a tremendous opportunity for Israel.”

Israel hailed the agreement as the first of its kind that India has signed with a Western-oriented economy among the countries in the Organisation for Economic Co-operation and Development (OECD). Last year, India sealed similar agreements with the United Arab Emirates (UAE) and Uzbekistan.

Smotrich is leading a government delegation that departed for India on Sunday night to promote economic collaborations between the two nations. The delegation includes the ministry’s chief economist, Shmuel Abramzon, Accountant General Yali Rothenberg, and Director-General Ilan Rom. Other key officials include Israel Securities Authority Chairman Seffy Singer.

The bilateral investment agreement provides safeguards for investors by establishing mutual protections, giving Israeli investors more certainty against, for example, regulatory changes in both countries, as well as security from expropriation. The treaty establishes conditions for fair treatment and non-discrimination and provides a forum for independent dispute settlement through arbitration.

The agreement comes as some countries are threatening to cut back economic ties with Israel, and large global investment funds are divesting Israeli assets over the country’s conduct in Gaza during the ongoing war with the Hamas terror group.

“The partnership with India is a significant growth engine for the economy and investors from both countries,” said Rothenberg. “Combining forces in the areas of infrastructure, innovation, and financial market development is a basis for expanding economic opportunities and deepening strategic ties.”

“Cooperation between governments and business communities is key to establishing our status as natural partners in the global arena,” he added.

During the three-day visit that started Monday, the Israeli government delegation, led by Smotrich, will be meeting with Indian government officials, including Commerce and Industry Minister Piyush Goyal, and Housing and Urban Affairs Minister Manohar Lal Khattar.

The government entourage is also joined by an Israeli business delegation, which will meet business leaders and representatives of the Jewish community in India to deepen economic and financial connections between the two countries.

Bilateral relations between India and Israel have strengthened in recent years, leading to cooperation projects in agriculture, science, health, IT and telecommunications. Both Israel and India have been expressing interest in cooperation in additional areas, such as water, fintech, construction and infrastructure.

Smotrich said that the ministry is considering opening a representation in India to strengthen ties with government and private stakeholders and to promote joint economic projects.

India is the most populous country and the fifth-largest economy in the world. The $3.9 trillion economy is Israel’s second-largest trading partner in Asia, after China. In 2024, bilateral trade volume between Israel and India reached about $5 billion, which included $2.5 billion in Israeli exports, $1 billion in diamond trade and $1.5 billion in imports from India to Israel.

The bilateral investment agreement is seen as preparing a common ground for advancing the ongoing negotiations for a future free trade agreement (FTA) between Israel and India. Earlier this year, Economy Minister Nir Barkat led a large business delegation to New Delhi to make progress on the long-touted FTA pact.

The moves come as US President Donald Trump is seeking to revamp plans for a proposed US-India trade corridor through Israel. The Trump administration has continued a push from its predecessor Joe Biden to build a rail and shipping corridor linking India with the Middle East, Europe, and the US — an ambitious project aimed at fostering economic growth and political cooperation.

Israel exports to India include machinery, electrical and mechanical equipment, chemicals, as well as optical and medical equipment, according to the Economy Ministry.

During the trip to India, the Israeli delegation will also visit the International Financial Services Centre (IFSC), India’s financial hub in Gujarat, for potential collaboration in the fintech sector.

Bilateral ties between Israel and India go beyond diamonds and agriculture. Israel is the fourth largest supplier of military hardware to India.

The Smotrich-led delegation marks the fourth visit this year by Israeli ministers to India, following trips by Tourism Minister Haim Katz and Agriculture Minister Avi Dichter. In July, Defense Ministry Director General Amir Baram made his first working visit to India, aiming to deepen industrial cooperation with defense firms in the country.

Times of Israel staff contributed to this report.