Summary
India is revising its 2015 Model Bilateral Investment Treaty after the Union Budget 2025-26 promised a more investor-friendly version and the revised text is reportedly awaiting Cabinet approval. The 2015 model was written as a defensive response to the 2011 White Industries award.
India's newer treaties with the UAE, Israel and Uzbekistan have since moved away from it: they shorten the local-remedies period to three years, keep dispute settlement outside MFN clauses and allow the state to bring counterclaims.
This Opinion argues that the new model should adopt that tested practice rather than move broadly towards investors.
WHY IN NEWS FOR UPSC & STATE PCS
The revised Model BIT announced in the Union Budget 2025-26 is reportedly finalised and awaiting Cabinet approval. In the meantime, the India-Israel Bilateral Investment Agreement entered into force on July 4, 2026 with a three-year local-remedies period, joining the India-UAE treaty.
This has widened the gap between India's 2015 model and its actual treaty practice and that gap is what the revision now has to address.
Standard News
India's Next Model BIT Should Codify Its Own Practice, Not Swing Towards Investors
TAN's position: the revised Model Bilateral Investment Treaty should write into the template the four things India's recent treaties already do. It should not tilt broadly towards investors simply because the Budget asked for an investor-friendly model.
The gap between the model and India's treaties India's 2015 Model BIT was built defensively.
After the White Industries award of 2011, it narrowed the definition of investment, framed protections tightly and required investors to spend at least five years in Indian courts and administrative forums before starting arbitration. India's recent treaties have moved away from that template:
- The India-UAE BIT (2024) sets the local-remedies period at three years.
- The India-Israel agreement, in force since July 4, 2026, also sets three years.
- The India-Uzbekistan BIT (2024) allows India to bring a counterclaim against an investor.
- Recent Indian treaties keep dispute-settlement procedures outside MFN clauses. The model is supposed to be India's opening position in negotiations. A model that asks for five years when India has already agreed to three in two concluded treaties no longer works as an opening position, because partners can see it will be conceded.
What the new model should say
- Three years of local remedies, as the standard term.
- MFN excluded from dispute settlement, in explicit language.
- State counterclaims, with clear conditions on when they can be brought.
- Binding investor obligations on sustainable development and responsible conduct, written as legal duties rather than statements in the preamble.
The strongest objection The strongest objection comes from India's own experience.
White Industries showed that an award against India can follow from slow Indian courts. If investors can reach arbitration after three years instead of five, they get to a tribunal while their domestic cases may still be pending. Any loosening of the model, on this view, invites expensive claims.
Why the
position still holds The objection is about loosening in general, but the three-year rule is not a new experiment. India has already accepted it with the UAE and Israel, alongside safeguards the 2015 model lacked. In White Industries, the tribunal used an MFN clause to import a more favourable standard from another treaty.
Recent Indian treaties close that route by keeping dispute settlement out of MFN and the Uzbekistan treaty adds counterclaims, so India can also bring claims of its own.
Quick Facts
Key numbers & takeaways — revise these first
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India's current Model BIT was approved in 2015 and its development followed the White Industries Australia Limited vs Republic of India award of 2011.
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The 2015 model requires investors to exhaust local judicial and administrative remedies for at least five years before starting treaty arbitration.
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The India-UAE BIT (2024) cuts that period to three years.
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The India-Israel Bilateral Investment Agreement entered into force on July 4, 2026, also with a three-year period.
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Article 16.2 of the India-Uzbekistan BIT (2024) allows the host state to bring a counterclaim against an investor.
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In Maffezini vs Spain (2000), an investor used an MFN clause to avoid an 18-month local-court requirement.
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In Plama vs Bulgaria (2005), a tribunal refused to allow dispute-settlement provisions to be imported through MFN without clear treaty language.
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UNCITRAL Working Group III is examining ISDS reforms, including a permanent tribunal, an appellate mechanism and dispute prevention.
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The Department of Economic Affairs in the Ministry of Finance drafts and negotiates India's investment treaties.
Connect the dots for your UPSC preparation.
Standard news covers the event. Log in to read our comprehensive analysis and uncover the hidden constitutional, structural, and ethical dimensions of this topic:
The full counter-argument at its strongest: why pairing a shorter local-remedies period with India's court delays could recreate the conditions behind White Industries
A clause-by-clause reading of how the UAE, Israel and Uzbekistan treaties address each part of that objection
The Maffezini and Plama arbitrations and why the MFN carve-out matters more than whether the wait is three or five years
The specific drafting changes TAN would reject and the evidence that would make TAN reconsider its position
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