Kapoor, 62, spoke out against "abhorrent government policies" towards refugees as he was named the recipient of this year's Genesis prize, dubbed Jewish Nobel.
The prize committee, headed by Jewish Agency Chairman Natan Sharansky, acknowledged Kapoor as "one of the most influential and innovative artists of his generation".
Kapoor joins Itzhak Perlman, former New York City Mayor Michael Bloomberg, and actor-director Michael Douglas as recipients.
Kapoor said he would use the award money to help alleviate the refugee crisis and try to expand the Jewish community's engagement in a global effort to aid Syrian refugees.
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"As inheritors and carriers of Jewish values, it is unseemly, therefore, for us to ignore the plight of people who are persecuted, who have lost everything and had to flee as refugees in mortal danger," he said.
"Outsider consciousness resides at the heart of Jewish identity and this is what motivates me, while accepting the honour of the Genesis Prize, to re-gift the proceeds to refugee causes."
"I am an artist, not a politician, and I feel I must speak out against indifference for the suffering of others. There are over 60 million refugees in the world today - whatever the geography of displacement, the refugees crisis is right here on our doorstep," he said.
"We particularly admire how, in an age frequently characterised by cynicism and indifference, Anish continually advocates for the world's disadvantaged - challenging all of us to do more to help wherever and whenever we can," Polovets said.
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Kapoor was born in Mumbai to a Jewish mother who had immigrated to India from Iraq as a child and a Punjabi Indian father who served in the Indian Navy as a hydrographer.
Kapoor won the Turner Prize in 1991 and received a knighthood in 2013. His works include 'Cloud Gate' at Chicago's Millennium Park and the 'Orbit' at London's Olympic Stadium. Kapoor also created the Holocaust Memorial for the Liberal Jewish Synagogue in London and the 70 candles for Holocaust Memorial Day in Britain in 2015, commemorating the 70th anniversary of the liberation of Auschwitz.