India’s Bilateral Investment Treaty Framework: Gaps and Fixes
Why in the news
Experts say India’s current BIT framework, drafted to avoid disputes like Cairn Energy and Vodafone, is too restrictive for investors.
Key facts
- Investors cite legal unpredictability and restrictive dispute resolution.
- Local remedies must be exhausted for five years before international arbitration.
Problems and fixes
| Issue | Suggested fix |
|---|---|
| Long local remedy rule | Fork in the Road (FITR) clause or shorter exhaustion |
| Narrow enterprise-based investment definition | Broader asset-based definition |
| No MFN clause (to stop treaty shopping) | MFN for substantive, not procedural, protection |
| No Fair and Equitable Treatment standard | Balanced FET, as in EU treaties |
| No ESG provisions | Calibrated ESG approach |
| Instability after 2016 | Transparent stakeholder consultation |
Way forward
- Reform with balance, not a return to the pre-2016 investor-heavy stance.
Exam angle
- Abbreviations: BIT, MFN, FET, FITR, ESG.