After India liberalized its economy in 1991, it opened its doors to foreign investments and signed its first BIT with the UK in 1994. Since then, India has entered into 84 BITs, of which only 14 remain active, while 58 have been terminated. India has also signed Comprehensive Economic Cooperation Agreements (CECAs), which include provisions for investments, trade, and intellectual property.

New Delhi (ABC Live): Bilateral Investment Treaties (BITs) set the foundation for investments by individuals or entities from one country into another. The first BIT was signed between Germany and Pakistan on November 25, 1959, marking the beginning of a structured approach to cross-border investments. While cross-border investments existed during colonial times, they lacked the modern mechanisms for resolving disputes that BITs provide today.

India’s Journey with BITs

Post-Liberalization Adoption
After India liberalized its economy in 1991, it opened its doors to foreign investments and signed its first BIT with the UK in 1994. Since then, India has entered into 84 BITs, of which only 14 remain active, while 58 have been terminated. India has also signed Comprehensive Economic Cooperation Agreements (CECAs), which include provisions for investments, trade, and intellectual property.

Growth in Foreign Direct Investment (FDI)
India has emerged as one of the top 10 global destinations for Foreign Direct Investment (FDI). In FY 2018-19, FDI inflows grew by 11.5% to $62 billion, with key sectors such as defence, telecommunications, e-commerce, and insurance driving this growth. This increase is attributed to favourable policies and improved ease of doing business rankings.

India’s Model BIT, 2016

India’s Model BIT, 2016, represents a significant shift from earlier BIT frameworks. It was designed to address lessons from past disputes, balancing the need to attract foreign investments with the protection of sovereign regulatory powers.

Significant BIT Disputes Involving India

1. White Industries v. India
   An Australian company alleged delays in the Indian judicial system, claiming these violated BIT provisions. India was ordered to pay damages for breaching its treaty obligations.
2. Louis Dreyfus v. India
   A French investor’s claims were dismissed, marking a rare victory for India in BIT arbitration.
3. Vodafone v. India
   This case revolved around retrospective tax amendments. Indian courts affirmed the limited scope of domestic intervention in BIT arbitrations.

Conclusion

India’s Model BIT, 2016, reflects an effort to protect its regulatory space while fostering a favourable investment environment. However, its stringent provisions demand careful negotiation with partner countries to achieve a balance between attracting investments and maintaining sovereign safeguards.

To read India’s Model BIT, 2016click here