How India plans to rebuild its new investment treaty network to attract investors, Pg22

Key Highlights:

• India is overhauling its Bilateral Investment Treaty (BIT) network after unilaterally terminating multiple treaties between 2016 and 2017.
• The government expects to finalize 4-5 new investment agreements by the end of the year.
• A new BIT template, announced by Finance Minister Nirmala Sitharaman, is awaiting Cabinet approval to attract sustained foreign investment.
• Recent agreements with Saudi Arabia, Israel, and the UAE have been signed under this new framework.
• The new pacts show increased flexibility regarding the Exhaustion of Local Remedies (ELR) rule for foreign investors.

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Detailed Insights:

• The review of the 2016 Model BIT was announced in the 2025-26 Union Budget to make it more investor-friendly.
• India's previous insistence on a five-year ELR period after 2016-17 terminations was a major concern for foreign investors.
• The BIT with the UAE in 2024 includes a three-year ELR rule for investors.
• The recently finalized deal with Saudi Arabia allows investors to approach international arbitration in two years.
• The Investor-State Dispute Settlement (ISDS) mechanism protects foreign investments by allowing claims against host states for treaty violations.
• The new framework aims to balance investor protection with the state's right to regulate in the public interest.
• Developing countries like South Africa and Indonesia also terminated BITs to preserve policy space against adverse international tribunal decisions.

Key Concepts Involved:

• Bilateral Investment Treaty (BIT): An agreement between two countries outlining rules for private investment between them.
• Exhaustion of Local Remedies (ELR): A rule requiring foreign investors to seek redress in domestic courts before international claims.
• Investor-State Dispute Settlement (ISDS): A mechanism allowing foreign investors to bring claims against host states for alleged treaty violations.