Background
India and Israel have been engaging in discussions for a Free Trade Agreement (FTA) for several years. The agreement aims to strengthen bilateral trade by reducing tariffs, enhancing market access, and fostering cooperation across key sectors such as technology, defense, digital services, agriculture, and renewable energy.
Recent Developments
On September 8, 2025, India and Israel signed a Bilateral Investment Treaty (BIT), which is being seen as a major step toward finalizing the long-awaited FTA. The BIT provides legal and regulatory assurance to investors from both nations, ensuring fair treatment, protection, and independent arbitration mechanisms.
Key Highlights of the BIT
- Provides security for Indian businesses investing in Israel and vice versa.
- Builds a strong foundation for deeper trade negotiations.
- Establishes investor confidence by ensuring transparency and stability.
- Recognized as the first such treaty India has signed with an OECD country under its revised framework.
UPI-Enabled Cross-Border Payments
Alongside the BIT, both countries are working on enabling UPI-driven digital payment systems for cross-border transactions. This move will allow seamless, low-cost, real-time transfers, especially beneficial for SMEs, startups, and e-commerce platforms.
Strategic Implications for the FTA
- Foundation for FTA: The BIT sets the stage for quicker FTA negotiations, expected to conclude in the near future.
- Trade Expansion: Current bilateral trade, valued at around USD 4 billion annually, is expected to grow significantly once the FTA is finalized.
- Focus Sectors: Technology, cybersecurity, defense innovation, pharmaceuticals, fintech, and agritech are expected to gain the most.
- Business Confidence: Companies can now invest and collaborate with greater assurance of protection and financial integration.
Discussion Points for Businesses
- What opportunities does the India–Israel FTA open for exporters and importers?
- How can UPI-enabled payments transform bilateral trade efficiency?
- Which sectors will gain the most competitive advantage post-FTA?
- What readiness strategies should companies adopt to leverage these changes?
Takeaways for Hoysala International
- The India–Israel BIT and the upcoming FTA create fresh opportunities for cross-border trade.
- Digital financial integration will simplify payments, creating smoother operations for exporters and importers.
- Hoysala International can explore expansion in technology partnerships, digital services, and sustainable product exports while preparing for tariff benefits under the FTA.
Conclusion:
The BIT signed on September 8, 2025, is not just an agreement—it’s a signal of trust, cooperation, and forward momentum. With UPI integration and an FTA on the horizon, the India–Israel economic corridor is set to become more dynamic, secure, and innovative. For forward-looking companies like Hoysala International, this is the moment to strategize, adapt, and seize new global opportunities.