India’s Model BIT — a decade later, amid changes

India’s effort to revise its Model Bilateral Investment Treaty (BIT) comes almost a decade after the revised mannequin was accepted in 2015. The Union Budget 2025-26 had introduced that the mannequin can be revamped and made extra investor-friendly. The assessment comes as each India’s treaty follow and the worldwide funding regime are altering. The query, due to this fact, will not be merely whether or not India ought to provide traders roughly safety. It’s about what India has learnt from the previous decade and the way these classes ought to form its new mannequin.

A cautious framework

India’s 2015 Mannequin BIT emerged from a specific historic context. The White Industries Australia Restricted vs Republic of India award (2011) and broader issues over investor-state arbitration contributed to a cautious strategy. The mannequin adopted a narrower definition of funding, rigorously framed substantive protections, regulatory exceptions and a requirement to exhaust all judicial and administrative cures for a minimum of 5 years earlier than commencing treaty arbitration.

India’s place has since advanced. It has concluded new-generation investment agreements with the United Arab Emirates (UAE), Uzbekistan and Israel. The India-UAE BIT offers for a three-year interval for pursuing native cures relatively than the five-year interval below the 2015 Mannequin. The India-Israel Bilateral Funding Settlement (BIA), which entered into pressure in July 2026, equally offers for a three-year interval for pursuing native cures. These agreements point out larger flexibility in India’s treaty follow since 2015.

A Mannequin BIT is usually not a inflexible template however a place to begin for negotiations. It alerts to potential treaty companions the protections and obligations a state seeks, whereas permitting particular person treaties to mirror the circumstances and priorities of the events.

The brand new mannequin ought to due to this fact present a transparent framework for India’s future treaty negotiations, whereas leaving enough room for mandatory changes in particular person agreements. It’s right here that the contributions of Makane Moïse Mbengue are related. His scholarship teaches {that a} growing state needn’t at all times be a rule-taker below worldwide funding legislation, however may also be a rule-shaper by its treaty follow. India’s revamp of its Mannequin BIT presents the same alternative.

The worldwide context has additionally modified. The United Nations Commerce and Growth (UNCTAD) factors to a shift towards funding facilitation, cooperation, sustainable improvement and extra rigorously outlined investor protections, with much less reliance on conventional investor-state dispute settlement (ISDS). The United Nations Fee on Worldwide Commerce Legislation (UNCITRAL) is inspecting reforms to the ISDS, together with a everlasting tribunal and appellate mechanism, damages and compensation, and dispute prevention. India’s revised Mannequin BIT should due to this fact reply to a altering funding regime, not merely revisit the 2015 Mannequin.

What a brand new mannequin should think about

The brand new mannequin should think about whether or not to incorporate the Most Favoured Nation (MFN) provision. In most funding treaties entered into by India, the MFN provision is absent, lowering the likelihood for an investor to assert higher safety below different treaties. Nevertheless, if the brand new mannequin consists of this provision, it needs to be very clear about its scope. In Emilio Agustín Maffezini vs Kingdom of Spain, an MFN clause was used to bypass an 18-month local-court requirement by counting on extra beneficial dispute-settlement provisions in one other treaty. Plama Consortium Restricted vs Republic of Bulgaria rejected the importation of such provisions within the absence of a transparent treaty provision. Latest treaty drafting additionally offers examples of expressly excluding dispute-settlement procedures from the scope of MFN clauses. The scope of the MFN provision ought to due to this fact be outlined, notably in relation to dispute settlement.

Investor obligations are one other side of latest Indian follow that may assist set a basis for the brand new mannequin. Underneath the India-Uzbekistan BIT, a state is expressly permitted to say a counterclaim in opposition to an investor or funding. The brand new mannequin can take a cue from this follow and lay down investor obligations and the circumstances through which counterclaims might be asserted.

The availability on dispute settlement additionally requires reassessment. The five-year requirement to exhaust all judicial and administrative cures below the 2015 Mannequin may very well be assessed in opposition to the practices adopted by India since then. The three-year interval for pursuing native cures used within the India-UAE and India-Israel funding agreements exhibits larger flexibility in India’s strategy. The Mannequin BIT might also present for simpler session and dispute-prevention procedures previous to arbitration, that are being mentioned at UNCITRAL Working Group III.

Want for precision, readability

The substantive protections needs to be equally exact. Readability of language regarding expropriation and truthful and equitable remedy (FET) might assist keep away from confusion in interpretation whereas safeguarding the suitable of the state to control for the general public good. Sustainable improvement and accountable funding should not be left as coverage declarations. The place India needs to impose obligations on traders, these obligations needs to be expressed in clear authorized phrases. The modifications needn’t make the brand new mannequin uniformly extra beneficial both to traders or to states. The purpose needs to be a mannequin that’s clearer, extra workable and higher suited to India’s place immediately, whereas permitting room for mandatory changes in particular person treaties.

With the revised mannequin now reportedly finalised and awaiting Cupboard approval, the important thing query can be whether or not its remaining textual content adequately displays the teachings of India’s treaty expertise over the previous decade whereas offering a coherent framework for future negotiations.

Jyoti Singh is an advocate primarily based in Delhi and has been a authorized marketing consultant to the Division of Financial Affairs, Authorities of India