India Eyes Investment Treaty Overhaul

India is undertaking a significant review of its bilateral investment treaty (BIT) template, aiming to enhance its attractiveness to foreign investors amidst global capital flow concerns. Officials are evaluating potential relaxations to the standard five-year waiting period that foreign investors must observe before initiating international arbitration for dispute resolution. This initiative signals a strategic shift to draw in more sustained foreign capital.

The government is also assessing the benefits of offering 'most-favoured nation'-forward benefits, which would automatically extend any concessions made to one treaty partner to others. However, stringent safeguards are planned to prevent potential misuse of treaty terms and to ensure India retains its sovereign policy-making autonomy, while also guarding against 'treaty-shopping'.

This reassessment follows past litigation challenges and a notable dip in foreign direct investment (FDI) inflows. With FDI recovering but net inflows remaining subdued, India is keen to streamline investment treaties. The review is being conducted with broader consultations to ensure flexibility, as final BITs will be tailored to specific bilateral relationships, not adopting a one-size-fits-all approach.