The Role Of Bilateral Investment Treaties (BITs) In Regulating FDI In India
- IJLLR Journal
- 2 hours ago
- 2 min read
Anukriti Bisht, Amity University, Noida
Meenu Sharma, Amity University, Noida
ABSTRACT
Foreign Direct Investment (FDI) has emerged as a cornerstone of modern economic growth, technological advancement, and global market integration. However, the steady inflow of foreign capital largely depends on the level of confidence international investors have in the host nation’s legal and regulatory framework. To build and preserve this trust, countries often rely on Bilateral Investment Treaties (BITs), which establish reciprocal guarantees such as fair and equitable treatment, protection against arbitrary expropriation, and access to neutral dispute-settlement mechanisms.
India’s experience with BITs has undergone a marked transformation—from an open and investor-oriented approach during the liberalization era of the 1990s to a more measured and sovereignty-conscious framework in the aftermath of several high-profile arbitral disputes. The broad and investor- favorable provisions in early treaties led to multiple claims against the state, as illustrated in White Industries v. India, Vodafone International Holdings B.V. v. Union of India, Cairn Energy v. India, and Devas Multimedia v. India. The policy repercussions of these cases motivated India to overhaul its treaty practice and introduce the 2016 Model BIT, which places greater emphasis on regulatory autonomy, precise definitions, and the exhaustion of local remedies before recourse to international arbitration.
This paper critically analyzes the evolving function of BITs in shaping India’s investment regime and assesses how the restructured model seeks to balance investor protection with the state’s developmental and constitutional priorities. It also offers a comparative assessment of India’s policy orientation vis-à-vis global approaches such as the European Union’s Investment Court System and the United States–Mexico–Canada Agreement (USMCA). The study concludes that India’s present treaty framework represents a deliberate transition toward sustainable and equitable investment governance—aimed at attracting responsible foreign investment while preserving national regulatory space and policy sovereignty.
Keywords: Bilateral Investment Treaties (BITs), Foreign Direct Investment (FDI), International Investment Law; Investor–State Dispute Settlement (ISDS), Model BIT 2016, Investment Arbitration, Expropriation, Fair and Equitable Treatment (FET), India’s Investment Policy.
