As India revises its Model BIT, an op-ed seeks consultation and Parliament's scrutiny
India's investment treaty template is being rewritten. Who gets a say before the Cabinet signs off?
Published 5 September 2026. Written by Pratidin from the reports linked at the end; every fact checked by a separate review before publishing. How we work
An op-ed titled 'A BIT of a reset, with a wider debate' says that India is revising its 2015 Model Bilateral Investment Treaty (BIT), the template it uses to negotiate treaties that protect foreign investors. In her Budget speech of 1 February 2025, Finance Minister Nirmala Sitharaman said: "To encourage sustained foreign investment and in the spirit of 'first develop India', the current model BIT will be revamped and made more investor-friendly." In August 2026, Economic Affairs Secretary Anuradha Thakur said the review was nearing completion and could go to the Cabinet soon. The author argues that a BIT must strike a "reasonable equilibrium between investment protection and the State's right to regulate", and that the 2015 model "tilted too heavily towards regulatory autonomy".
The background is a policy swing. By 2015 India had signed BITs with 83 countries, most with broad investor protection. After a wave of claims by foreign investors, starting with the White Industries award of 2011, India adopted a much stricter model in 2015 and terminated most older treaties; a 2021 report of Parliament's Standing Committee on External Affairs counted 77 terminated. The 2015 model requires investors to use Indian courts for five years before going to international arbitration, leaves out a most-favoured-nation (MFN) clause and carves out taxation. Few countries accepted it: Business Standard lists Belarus, Kyrgyzstan, Brazil, Taiwan and Uzbekistan. Newer treaties with the UAE (in force August 2024) and Israel (in force 4 July 2026) cut the local-remedies period to three years, a sign of the coming shift.
The op-ed's main point is about process, not content. Treaties in India are made by the executive, and Parliament has no formal role in approving them. The author points to other democracies: the United Kingdom and Australia place negotiated treaty texts before Parliament before ratification, Norway held public consultations on its model BIT, and Colombia released its model for comment. India itself put the 2015 draft in the public domain, and the Law Commission reviewed it. The author proposes four steps: an independent core group of experts; input from industry associations, arbitrators, law firms and civil society; a public draft for wide consultation; and placing the final draft before Parliament and its committees. Those who favour executive control reply that treaty negotiation needs confidentiality and speed.
Prelims facts
- India is revising its 2015 Model BIT; the Budget speech of 1 February 2025 promised to make it "more investor-friendly".
- The 2015 model requires foreign investors to pursue local remedies for five years before international arbitration, excludes MFN and carves out taxation.
- India had BITs with 83 countries by 2015 and terminated 77 of them, according to Parliament's External Affairs committee in 2021.
- India's BITs with the UAE (2024) and Israel (2026) shortened the local-remedies requirement to three years.
- Treaty-making in India is an executive function; Parliament has no formal approval role, and the op-ed wants the revised model placed before Parliament and its committees.
Quick recall
- When did the Finance Minister promise to revamp the Model BIT?
- Budget speech, 1 February 2025: "more investor-friendly".
- Local-remedies period under India's 2015 Model BIT?
- Five years before international arbitration.
- Local-remedies period in the India-UAE and India-Israel BITs?
- Three years.
- First investment arbitration award lost by India?
- White Industries (Australia), 2011.
- How many countries had BITs with India by 2015, and how many were terminated?
- 83 countries; 77 terminated (Standing Committee on External Affairs, 2021).
- Which Article gives Parliament power to make laws to implement treaties?
- Article 253.
- Which UK law requires treaties to be laid before Parliament for 21 sitting days?
- Constitutional Reform and Governance Act, 2010.
- Which Law Commission report examined the draft 2015 Model BIT?
- The 260th Report (2015).
Prelims practice question
With reference to India's 2015 Model Bilateral Investment Treaty, consider the following statements:
1. It requires a foreign investor to pursue remedies in domestic courts for a period before starting international arbitration.
2. It includes a most-favoured-nation clause.
3. It excludes taxation measures from its scope.
Which of the statements given above are correct?
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
Show answer
Answer: (c) 1 and 3 only. 1 is correct: five years under the 2015 model. 2 is wrong: the model omits MFN, which investors had used (as in White Industries) to import better terms from other treaties. 3 is correct: taxation is carved out.
Asked before in UPSC
Recurring theme: Foreign investment, investment treaties and India's trade agreements
Both questions ask how India balances foreign investment against national regulatory interests; the BIT debate supplies the legal side of that balance.
The India-EU talks that began as the BTIA now include a separate investment protection agreement, which a revised Model BIT will shape.
Mains practice question
India's 2015 Model Bilateral Investment Treaty sought to protect the State's right to regulate, but few countries signed on. Discuss the balance a revised model must strike, and whether Parliament should have a role in treaty-making. (250 words)
Model answer
A bilateral investment treaty (BIT) protects investors from one country in the other and lets them sue the host State before international tribunals. India is revising its 2015 Model BIT, which the Budget speech of 1 February 2025 promised to make "more investor-friendly".
Why the 2015 model was strict
- A wave of claims after White Industries (2011), and later Vodafone and Cairn, exposed India to large awards.
- The model demanded five years of local remedies, dropped MFN, carved out taxation and narrowed protections.
- India terminated 77 older treaties.
Why it needs change
- Few takers: Belarus, Kyrgyzstan, Brazil, Taiwan, Uzbekistan.
- Investors cite regulatory uncertainty and slow courts; treaties with the UAE and Israel already cut local remedies to three years.
- Investment protection talks with the EU and the UK depend on the new template.
The balance to strike
- Clear, predictable protection (fair treatment, compensation for expropriation).
- Safeguards for public health, environment and tax policy.
- Reasonable access to arbitration, with transparency and ethics rules for arbitrators.
Should Parliament have a role?
- For: Treaties bind future governments; the UK and Australia place treaties before Parliament; public consultation improves quality and legitimacy.
- Against: Negotiation needs confidentiality and speed; Article 73 and Entry 14 of the Union List give the executive this power; Parliament acts through implementing laws under Article 253.
- Middle path: expert group, stakeholder input, public draft and committee scrutiny, as the op-ed proposes.
Conclusion
A balanced model plus a transparent process would win investor trust without giving up the State's right to regulate.
The basics
Why this matters
Foreign investors bring capital, technology and jobs, but they fear that a host government may change the rules after they have invested. A Bilateral investment treaty is a promise between two countries to treat each other's investors fairly, backed by the right to sue. India is now rewriting the template it uses for these treaties, and the op-ed of 5 September 2026 asks who should have a say.
What goes into a BIT
Most treaties share a common set of clauses. The fight is over how wide each one is. The enforcement clause, Investor-state dispute settlement, is what makes a BIT bite.
- 1Definition of investmentDecides who and what is protected: only enterprises, or also shares, bonds and contracts.
- 2Fair and equitable treatmentProtects against arbitrary or abusive State action.
- 3Most-favoured-nation (MFN)Lets an investor claim any better treatment given to investors from a third country.
- 4ExpropriationRequires compensation if the State takes over or effectively destroys an investment.
- 5Investor-state dispute settlementLets the investor take the State to international arbitration.
How India swung
India moved from generous treaties in the 1990s to a strict model after losing claims, and is now swinging part of the way back. See India's 2015 Model BIT.
- 1994India signs its first BIT, with the United Kingdom.
- 2011White Industries award: the first investment arbitration loss for India.
- 2015New Model BIT adopted after a public draft and Law Commission review.
- 2016 to 2017India sends termination notices for most older BITs.
- 1 February 2025Budget speech promises a more investor-friendly model.
- 4 July 2026India-Israel BIT in force, with a three-year local-remedies period.
The process question
In India the executive negotiates, signs and ratifies treaties; Parliament comes in only if a law is needed to implement one. The op-ed argues that a template shaping dozens of future treaties deserves wider consultation. See Treaty-making power in India.
- Executive power under Article 73
- No mandatory parliamentary approval
- Parliament legislates to implement under Article 253
- Constitutional Reform and Governance Act, 2010
- Treaty laid before Parliament for 21 sitting days before ratification
- Parliament can object and delay ratification
Go deeper
In one line: India is rewriting the template for its investment treaties, and an op-ed argues that experts, industry, civil society and Parliament should all be heard before the Cabinet approves it.
Why it matters for UPSC
Foreign investment, trade agreements and the constitutional scheme of treaty-making cut across GS2 and GS3. The swing from generous to strict to balanced treaties is a ready Mains example.
The core idea
A Bilateral investment treaty protects foreign investors and is enforced through Investor-state dispute settlement. After losing claims, India adopted a strict India's 2015 Model BIT, which few countries accepted. The government now wants a more investor-friendly model. The op-ed's worry is the process: under Treaty-making power in India, the executive decides alone.
Numbers and dates to remember
- 83 countries had BITs with India by 2015; 77 were terminated (2021 committee report).
- 2015 model: five years of local remedies, no MFN, taxation excluded.
- UAE BIT in force August 2024; Israel BIT in force 4 July 2026; both use three years.
- Budget speech, 1 February 2025: model to be "more investor-friendly".
Where to go next
- Bilateral investment treaty: what these treaties promise.
- Investor-state dispute settlement: how investors sue States.
- India's 2015 Model BIT: why India went strict.
- Treaty-making power in India: who signs treaties and who checks them.
Go deeper: protection versus the right to regulate
Why investors want more. Under India's 2015 Model BIT, an investor must litigate in Indian courts for five years before going to arbitration, cannot use MFN to borrow better terms, and gets no protection on tax. Given slow courts, investors see the treaty as weak insurance. Few countries signed, and the op-ed says the model "tilted too heavily towards regulatory autonomy".
Why India went strict. Claims under older treaties, starting with White Industries in 2011 and including the Vodafone and Cairn tax disputes, showed that broad clauses could make public policy expensive. Investor-state dispute settlement tribunals are ad hoc, their awards can be large, and critics say they favour investors.
Where the new model seems headed. Treaties with the UAE and Israel cut local remedies to three years and widened the definition of investment to include portfolio holdings. This suggests a calibrated reset, not a return to the 1990s.
The democratic deficit. Under Treaty-making power in India, the executive negotiates and ratifies; Parliament can only legislate to implement. The op-ed contrasts this with parliamentary review of treaties in the UK and Australia and public consultations on model BITs in Norway and Colombia. Critics of wider consultation say negotiation needs confidentiality and speed. A committee-based review, like the one the External Affairs committee did in 2021 on BITs, is a possible middle path.
Bilateral investment treaty
What these treaties promise.
In one line: A bilateral investment treaty (BIT) is an agreement between two countries to protect investments made by investors of each in the other.
What it contains
A BIT defines what counts as an investment, promises fair and equitable treatment and non-discrimination (national treatment, and often most-favoured-nation treatment), requires compensation if an investment is expropriated, allows free transfer of funds, and sets out how disputes will be resolved, usually including Investor-state dispute settlement.
Why countries sign them
Host countries hope that legal protection lowers the risk investors see and so attracts capital. Home countries want protection for their companies abroad. The cost is that the host State accepts limits on how it can treat foreign investors, enforced by international tribunals.
Why it is in the news
India is revising India's 2015 Model BIT, its template for negotiating these treaties.
Where to go next
- Investor-state dispute settlement
- India's 2015 Model BIT
Investor-state dispute settlement
How investors sue States.
In one line: Investor-state dispute settlement (ISDS) lets a foreign investor bring a claim directly against the host State before an international arbitral tribunal.
How it works
The investor and the State each usually appoint an arbitrator, and a presiding arbitrator is chosen. Cases may run under the rules of ICSID (the World Bank's International Centre for Settlement of Investment Disputes) or UNCITRAL. India is not a member of the ICSID Convention, so its cases usually run under UNCITRAL rules. Awards can order large compensation.
The debate
Supporters say ISDS gives investors a neutral forum when local courts are slow or biased. Critics say it lets private tribunals second-guess public policy, lacks appeal and consistency, and can chill regulation.
Why it is in the news
India's 2015 model made access to ISDS hard (five years of local remedies); newer treaties cut this to three years.
Where to go next
- India's 2015 Model BIT
- Bilateral investment treaty
India's 2015 Model BIT
Why India went strict.
In one line: The 2015 Model BIT is India's template for investment treaties, designed to protect the State's right to regulate after costly investor claims.
How it came about
India signed many investor-friendly BITs from 1994 onwards. After the White Industries award of 2011 and a wave of claims, the government placed a draft model in the public domain in 2015; the Law Commission reviewed it in its 260th Report. The final model was adopted later that year, and India then terminated most older treaties.
Key features
An enterprise-based definition of investment; a requirement to pursue local remedies for five years before arbitration; no most-favoured-nation clause; taxation carved out; and narrower protections than older treaties.
Why it is in the news
Only a handful of countries signed on, and the government is revising it to be more investor-friendly.
Where to go next
Treaty-making power in India
Who signs treaties and who checks them.
In one line: In India the Union executive negotiates, signs and ratifies treaties; Parliament comes in only when a law is needed to give effect to one.
The constitutional basis
Entry 14 of the Union List covers entering into treaties and agreements with foreign countries. Article 73 extends the Union's executive power to matters on which Parliament can legislate, so the executive can make treaties without a separate law. Article 253 lets Parliament make laws for any part of India to implement a treaty, even on State subjects. There is no requirement that Parliament approve a treaty before ratification.
Other models
In the United Kingdom, the Constitutional Reform and Governance Act, 2010 requires most treaties to be laid before Parliament for 21 sitting days before ratification. Australia also tables treaties before Parliament.
Why it is in the news
The op-ed argues that a revised Model BIT should go through public consultation and parliamentary committees.
Where to go next
- Bilateral investment treaty
- India's 2015 Model BIT
Take the 5 September 2026 quiz: 24 Prelims-style questions with answers