India Revamps Model Bilateral Investment Treaty

Gist The Union Government is set to place a revised Model Bilateral Investment Treaty BIT before the Cabinet, following an announcement in the 2025 Union Budget . This revamp seeks to correct the 2015 model's heavy tilt towards state regulatory powers, which has deterred foreign capital and stalled treaty negotiations over the past decade. For UPSC aspirants, understanding this shift is crucial as it highlights the delicate balance between sovereign regulatory autonomy, international investment law, and the need for parliamentary oversight in treaty-making. Background A Bilateral Investment Treaty establishes the terms and conditions for private investment by nationals and companies of one state in another state. Historically, India revamped its BIT framework in 2015 after facing a wave of international arbitration suits from foreign investors over alleged breaches. The state responded by unilaterally terminating existing BITs and adopting the 2015 Model BIT as the new baseline for negotiations. Prior to this revision, the primary tension lay between guaranteeing investment protection for foreign capital and preserving the host state's sovereign right to regulate. The 2015 Model BIT was drafted to heavily…