Context: Recently, Israel’s Finance Minister visited India and signed a Bilateral Investment Agreement (BIA) with India.
Relevance of the Topic: Prelims: Bilateral Investment Agreement (BIA).
Key Features of Bilateral Investment Agreement
- Israel has become the first Organisation for Economic Co-operation and Development (OECD) member state with which India has signed a BIA under its new model Bilateral Investment Treaty (BIT) framework.
- Aim: To facilitate reciprocal investments by providing investors from both countries with legal certainty, transparency and protections.
- The BIA replaces the earlier investment agreement signed in 1996, which was terminated in 2017.
Significance of Bilateral Investment Agreement:
- Groundwork for FTA negotiations: The agreement lays the groundwork for future Free Trade Agreement (FTA) negotiations between India and Israel.
- Expected to increase bilateral investments between the two countries, which presently stands at a total of $800 million. Includes provisions to safeguard investments against expropriation, ensure transparency, and enable smooth transfers and compensation for losses.
- Protection for investors: Incorporates provisions for independent dispute resolution through arbitration, ensuring that investors have recourse in case of disputes.
- Labour mobility: Israel has already hired a large number of Indian blue-collar workers. BIA may further increase avenues for Indian labour mobility.
- Balances investor protection with the State’s regulatory rights, preserving sufficient policy space for sovereign governance.
The agreement is expected to strengthen Israeli exports, open new opportunities for both Indian and Israeli investors, and expand trade flows.