{"id":76295,"date":"2026-06-09T18:12:53","date_gmt":"2026-06-09T12:42:53","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=76295"},"modified":"2026-06-09T18:13:13","modified_gmt":"2026-06-09T12:43:13","slug":"india-bit-model","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/09-06-2026\/india-bit-model","title":{"rendered":"India\u2019s New Bilateral Investment Treaty (BIT) Model"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Government of India is revising its 2016 Model Bilateral Investment Treaty (BIT) to make it more investor-friendly while safeguarding India&#8217;s regulatory sovereignty and legal system.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is a Bilateral Investment Treaty (BIT)?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A Bilateral Investment Treaty (BIT) is an <strong>agreement between two countries that promotes and protects investments <\/strong>made by investors of one country in the other.<\/li>\n\n\n\n<li>It provides legal safeguards such as protection against expropriation, fair treatment, and dispute resolution mechanisms.<\/li>\n\n\n\n<li>BITs aim to <strong>improve investor confidence <\/strong>and <strong>facilitate foreign direct investment <\/strong>(FDI).<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Features of Bilateral Investment Treaties<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>National Treatment:<\/strong> Foreign investors receive treatment no less favourable than domestic investors.<\/li>\n\n\n\n<li><strong>Protection Against Expropriation:<\/strong> Investments cannot be nationalised or expropriated without due process and adequate compensation.<\/li>\n\n\n\n<li><strong>Fair and Equitable Treatment (FET):<\/strong> Investors are protected from arbitrary or discriminatory actions by the host state.<\/li>\n\n\n\n<li><strong>Free Transfer of Funds:<\/strong> Investors can transfer profits, dividends, and capital across borders subject to applicable regulations.<\/li>\n\n\n\n<li><strong>Dispute Settlement Mechanism: <\/strong>Provides procedures for resolving disputes between investors and host states or between states.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India&#8217;s Progress on BITs<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Evolution of India&#8217;s BIT Framework:<\/strong> India signed its first <strong>Model BIT in 1993, <\/strong>which was amended in<strong> 2003.<\/strong>\n<ul class=\"wp-block-list\">\n<li>Following several international arbitration disputes, India adopted a <strong>new Model BIT in December 2015, <\/strong>which became operational in <strong>2016.<\/strong><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Recent Developments: <\/strong>India has signed BITs or investment agreements with countries such as; Belarus, Kyrgyz Republic, United Arab Emirates, Uzbekistan and Brazil (through an Investment Cooperation and Facilitation Treaty).<\/li>\n\n\n\n<li><strong>In Budget 2025-26,<\/strong> the Government announced a review of the BIT framework to make it more investor-friendly while safeguarding national interests.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Features of the Proposed New BIT Model<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Two-Year Local Remedies Requirement: <\/strong>Foreign investors will be required to pursue remedies within India&#8217;s domestic legal system for <strong>at least two years <\/strong>before initiating international arbitration.\n<ul class=\"wp-block-list\">\n<li>For certain partner countries, a shorter <strong>one-year cooling-off period<\/strong> may also be considered during negotiations.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>No Most-Favoured Nation (MFN) Clause:<\/strong> The revised model is likely to exclude the Most-Favoured Nation (MFN) clause.\n<ul class=\"wp-block-list\">\n<li>MFN clauses <strong>allow investors to claim more favourable treatment<\/strong> available under India&#8217;s treaties with other countries.<\/li>\n\n\n\n<li>The government believes removing the clause will <strong>reduce treaty-shopping <\/strong>and legal uncertainties.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Taxation Matters Excluded: <\/strong>Tax-related disputes will remain outside the scope of investment treaties.\n<ul class=\"wp-block-list\">\n<li>This approach is influenced by past arbitration cases involving foreign companies such as<strong> Vodafone Group and Cairn Energy.<\/strong><\/li>\n\n\n\n<li>The government maintains that <strong>taxation is a sovereign policy matter <\/strong>and should <strong>not be subject to investor-state arbitration.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What are the concerns?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Investor Concerns: <\/strong>Mandatory exhaustion of local remedies before international arbitration may increase costs and delays. <strong>Lengthy judicial processes<\/strong> can discourage foreign investors.\n<ul class=\"wp-block-list\">\n<li><strong>The absence of a Most-Favoured Nation (MFN)<\/strong> clause may reduce investor protections available under other treaties.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>India&#8217;s Concerns:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Excessive investor rights<\/strong> may constrain legitimate public policy measures.<\/li>\n\n\n\n<li><strong>Investor-State Dispute Settlement (ISDS) <\/strong>mechanisms can challenge sovereign regulatory actions.<\/li>\n\n\n\n<li><strong>International arbitration awards <\/strong>may impose significant financial liabilities on governments.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Global Trends in Investment Dispute Settlement<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Shift Away from Traditional ISDS: <\/strong>Several countries are reconsidering traditional Investor-State Dispute Settlement mechanisms.\n<ul class=\"wp-block-list\">\n<li>For example, the BIT between Australia and the United Arab Emirates adopts <strong>State-to-State Dispute Settlement (SSDS)<\/strong> instead of ISDS.<\/li>\n\n\n\n<li>Under SSDS, disputes are resolved between governments rather than directly between investors and host states.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Adopt a balanced BIT framework<\/strong> that protects investors while preserving India&#8217;s regulatory sovereignty and policy space.<\/li>\n\n\n\n<li><strong>Strengthen commercial courts and contract enforcement<\/strong> to enhance investor confidence in domestic legal institutions.<\/li>\n\n\n\n<li><strong>Ensure regulatory stability and policy predictability<\/strong> through transparent and consistent policymaking.<\/li>\n\n\n\n<li><strong>Promote mediation, conciliation, and state-to-state dispute settlement mechanisms <\/strong>as alternatives to costly arbitration.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/business\/new-bilateral-investment-model-2-year-local-remedy-window-no-most-favoured-nation-clause-10730442\/\" target=\"_blank\" rel=\"noopener\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong> Context <\/strong><\/p>\n<li class=\"ms-5\"> The Government of India is revising its 2016 Model Bilateral Investment Treaty (BIT) to make it more investor-friendly while safeguarding India&#8217;s regulatory sovereignty and legal system. <\/li>\n<p><\/p>\n<p><strong> What is a Bilateral Investment Treaty (BIT)? <\/strong><\/p>\n<li class=\"ms-5\"> A Bilateral Investment Treaty (BIT) is an agreement between two countries that promotes and protects investments made by investors of one country in the other. <\/li>\n<li class=\"ms-5\"> It provides legal safeguards such as protection against expropriation, fair treatment, and dispute resolution mechanisms. <\/li>\n<p><a href=\" https:\/\/www.nextias.com\/ca\/current-affairs\/09-06-2026\/india-bit-model \" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-76295","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/76295","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=76295"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/76295\/revisions"}],"predecessor-version":[{"id":76297,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/76295\/revisions\/76297"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=76295"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=76295"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=76295"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}