India-Israel BIT Comes Into Effect; Includes Portfolio Investments

Chennai : The India–Israel Bilateral Investment Agreement (BIA) that came into force on Saturday, broadens protection to portfolio investments and gives foreign investors faster access to international arbitration, marking a shift from India’s 2015 Model Bilateral Investment Treaty.

The treaty was signed in New Delhi on September 8, 2025.

The 2015 model excluded portfolio investments, while the Israel agreement covers shares, stocks and other equity holdings, as well as qualifying bonds, loans and other corporate debt. This could widen India’s exposure to investor–state disputes beyond traditional foreign direct investment to certain financial investments. India offered similar flexibility in its 2024 investment treaty with the UAE.

According to GTRI, broader coverage of financial assets and quicker access to arbitration could increase legal and policy risks for India. The agreement suggests New Delhi is moving towards a more investor-friendly treaty framework, it said.

Similar to the UAE agreement, the Israel pact allows investors to seek international arbitration after pursuing domestic legal remedies for three years, compared with five years under India’s 2015 Model BIT and several later treaties.

The agreement provides national treatment to all sectors except land and real estate, National treatment requires each country to treat the other’s investors no less favourably than domestic investors in similar circumstances.

It also protects transfers of capital, profits, dividends, capital gains, interest, royalties and sale proceeds, subject to domestic laws and safeguards