{"id":118124,"date":"2026-08-09T10:48:38","date_gmt":"2026-08-09T05:18:38","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=118124"},"modified":"2026-08-09T13:00:35","modified_gmt":"2026-08-09T07:30:35","slug":"bilateral-investment-treaty-bit","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/bilateral-investment-treaty-bit\/","title":{"rendered":"Review of India\u2019s Model Bilateral Investment Treaty (BIT)"},"content":{"rendered":"<h2 style=\"text-align: justify;\"><b>Bilateral Investment Treaty (BIT) Latest News<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Union Finance Ministry is reviewing India&#8217;s <\/span><b>2015 <\/b><span style=\"font-weight: 400;\">Model Bilateral Investment Treaty (BIT) to make it more investor-friendly while safeguarding India&#8217;s sovereign interests.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The revised Model BIT is expected to be placed before the Union Cabinet soon.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The review gains significance amid <\/span><b>rising <\/b><span style=\"font-weight: 400;\">Overseas Direct Investment (<\/span><b>ODI<\/b><span style=\"font-weight: 400;\">) by Indian firms, changing global investment patterns, and <\/span><b>declining <\/b><span style=\"font-weight: 400;\">net Foreign Direct Investment (<\/span><b>FDI<\/b><span style=\"font-weight: 400;\">) into India.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Why the Model BIT is Being Reviewed<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The government is reassessing the 2015 Model BIT based on the &#8211;<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Experience from past investment treaty negotiations.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Global best practices in investment protection.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Increasing outward investments by Indian companies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Need to attract higher-quality FDI without compromising regulatory autonomy.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Unlike earlier years when India primarily sought to protect foreign investors, negotiations must now also safeguard Indian companies investing abroad.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>A New Dimension &#8211; Protecting Indian Investors Overseas<\/b><\/h2>\n<ul>\n<li><span style=\"font-weight: 400;\">According to the Economic Affairs Secretary, rising Overseas Direct Investment (ODI) has fundamentally changed India&#8217;s negotiating priorities.<\/span><\/li>\n<li><b>Key implications:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Indian companies are increasingly investing in foreign markets.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Future BITs must provide investment protection for Indian enterprises abroad.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Certain investor-protection clauses, earlier viewed cautiously, may now be retained to secure Indian investments overseas.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-weight: 400;\">This marks India&#8217;s transition from being primarily a capital-importing economy to one that is also a <\/span><b>significant capital exporter<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>What is a Bilateral Investment Treaty (BIT)?<\/b><\/h2>\n<ul>\n<li><span style=\"font-weight: 400;\">A BIT is an agreement between two countries to &#8211;\u00a0<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">Promote and protect investments made by investors of each country.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Guarantee fair and equitable treatment.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Protect against unlawful expropriation.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Enable Investor-State Dispute Settlement (<\/span><b>ISDS<\/b><span style=\"font-weight: 400;\">) through international arbitration when disputes arise.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>BIT vs trade agreement:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Under BIT, an investor can directly sue the host government through arbitration. However, disputes under trade agreements are settled between governments (State-to-State).<\/span><\/li>\n<li><span style=\"font-weight: 400;\">BITs focuses on investment protection, while trade agreements focuses on trade in goods and services.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">BITs involve greater legal exposure for sovereign governments, while trade agreements provide greater diplomatic flexibility.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Key Issues in the Existing 2015 Model BIT<\/b><\/h2>\n<ul>\n<li><span style=\"font-weight: 400;\">One of the most debated provisions is the <\/span><b>Local Remedies Clause<\/b><span style=\"font-weight: 400;\">, which requires foreign investors to exhaust domestic legal remedies for five years before approaching international arbitration.<\/span><\/li>\n<li><b>Concerns:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Considered restrictive by several developed countries and foreign investors.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Has slowed India&#8217;s ability to conclude new BITs.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Many countries have been reluctant to accept the existing Model BIT.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-weight: 400;\">The government is now reviewing not only this provision but several other clauses and is considering a <\/span><b>negative-list approach.<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Under this, only critical sovereign concerns would remain non-negotiable while greater flexibility is offered elsewhere.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>FDI and ODI Trends<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Gross FDI: <\/b><span style=\"font-weight: 400;\">Increased from $82 billion (2020-21) to a record $95 billion (2025-26).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Net FDI: <\/b><span style=\"font-weight: 400;\">Declined sharply to nearly $44 billion (2020-21), and less than $1 billion (2024-25), while recovering to about $7 billion (2025-26).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>ODI: <\/b><span style=\"font-weight: 400;\">Indian companies&#8217; overseas investments increased substantially. For example, from $11 billion (2020-21) to $28 billion (2024-25), and further to $34 billion (2025-26).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The fall in net FDI has also been driven by large-scale repatriation of foreign investments, exceeding $105 billion during 2024-25 and 2025-26.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Reasons Behind Declining Net FDI<\/b><\/h2>\n<ul>\n<li><span style=\"font-weight: 400;\">According to Chief Economic Adviser V. Anantha Nageswaran,<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">Global supply-chain localisation has intensified.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Developed countries are promoting <\/span><b>onshoring <\/b><span style=\"font-weight: 400;\">of manufacturing.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Indian firms increasingly invest abroad to establish a local presence rather than export alone.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Rising ODI reflects the <\/span><b>growing competitiveness <\/b><span style=\"font-weight: 400;\">and global expansion of Indian businesses.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Government&#8217;s stand on enforcement agencies:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Responding to concerns that agencies such as the Enforcement Directorate (ED) discourage investment, the government stated &#8211;<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">Gross FDI has continued to reach record levels.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Enforcement actions are becoming more transparent and procedure-driven.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Frivolous or excessive actions are being curtailed.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Investors primarily seek stable policies, predictable regulation and attractive returns, all of which India aims to provide.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-weight: 400;\">The government also emphasised the need for greater investor outreach to address any remaining concerns.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Significance and Challenges for India<\/b><\/h2>\n<ul>\n<li aria-level=\"1\"><b>Significance of revision:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Helps modernise India&#8217;s investment treaty framework.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Improves India&#8217;s attractiveness as an investment destination.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Protects growing overseas investments by Indian companies.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Supports India&#8217;s long-term Balance of Payments (<\/span><b>BoP<\/b><span style=\"font-weight: 400;\">) stability.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Balances investor confidence with regulatory sovereignty.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Strengthens India&#8217;s <\/span><b>integration <\/b><span style=\"font-weight: 400;\">into global investment and production networks.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Challenges ahead:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Balancing investor protection with sovereign regulatory powers.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Making BITs acceptable to developed countries while safeguarding national interests.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Preventing excessive investor litigation under ISDS.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Reversing the decline in net FDI amid changing global investment patterns.<\/span><\/li>\n<li><b>Ensuring policy certainty <\/b><span style=\"font-weight: 400;\">without compromising public-interest regulation.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><b>Source: <\/b><a href=\"https:\/\/indianexpress.com\/article\/business\/india-model-bit-review-overseas-investment-fdi-anuradha-thakur-10822789\/\" target=\"_blank\" rel=\"nofollow noopener\"><b>IE<\/b><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Finance Ministry is reviewing India\u2019s 2015 Model BIT to boost investor-friendliness while protecting sovereign interests.<\/p>\n","protected":false},"author":19,"featured_media":118145,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[9413,60,22,59],"class_list":["post-118124","post","type-post","status-publish","format-standard","has-post-thumbnail","category-upsc-mains-current-affairs","tag-bilateral-investment-treaty-bit","tag-mains-articles","tag-upsc-current-affairs","tag-upsc-mains-current-affairs-tag","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/118124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=118124"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/118124\/revisions"}],"predecessor-version":[{"id":118144,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/118124\/revisions\/118144"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/118145"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=118124"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=118124"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=118124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}