India has been climbing the ranks as one of the best economies to expand one’s business to. And it’s not just by improving their Ease of Doing Business score; India has also worked towards developing good relations with other countries. Such Bilateral Investment Treaties promote collaboration between two countries in terms of trading, investment, defense, culture, etc. India has been building these relationships, opening its doors to new entrepreneurs and opportunities. 

Up until 2015, India had signed Bilateral Investment Treaties (BITs) with 83 nations. But these were based on the 1993 Model of the agreement. The 2015 revised Model was then put into effect, with 4 new countries, 6 of the old batch, and negotiations with 37 nations.

Getting into Agreement

Bilateral Investment Treaties should be drafted with utmost precision and without any ambiguity. The idea is to minimize loopholes and reduce the chances of any party abusing the vagueness of the clauses. 

The model should be constantly reviewed to keep the provisions up-to-date and to ensure that it is highly detailed to help investors feel confident about investing in India. BITs should also be amended after going through case studies of various nations – incorporating clauses that worked for other countries and adapting them to benefit those expanding their business into India. Although the 2015 version of the BITs is an improvement over its predecessors, there is still scope for fine-tuning.

Settling Disputes

An agreement, as always, goes through a lot of changes. Both parties pitch amendments to make the treaty work for both parties. BITs suggest a good way to settle these disputes. Through arbitration via a neutral individual. Commonly people go to courts to make changes and help make the right decision. But the system can be lengthy and convoluted. It’s way easier just to take an unbiased opinion.

A neutral party can be either an institution appointed by the government, like the Permanent Court of Arbitration, or an ad hoc individual, mutually agreed upon by both parties. The idea is to get an impartial view of which way to go. This process is much faster and also provides a more in-depth thought process.

The effectiveness of BITs depends on many factors—the political climate, domestic policies, agreement of the nations, global scenarios, etc. Thus, building relations with other countries can be a complex process. So, India decided to focus on one part of the world at a time. Currently, India is looking at the Indo-pacific region via its Act East policy. This will, in turn, help strengthen ties with Southeast nations, increasing trade and connectivity and promoting a strategic partnership. 

India’s enhanced focus on creating more Bilateral Investment Treaties is a sign that it is working towards becoming a global hub for businesses. It will help make new connections and bolster the existing ones, providing a mutually beneficial relationship. These treaties build the foundation of a better economy, more stable market conditions, and improved collaboration.