What is a Bilateral Investment Treaty? Critically analyze their effects on Indian economy.

A BIT is a treaty between�two countries. It�sets out to�provide certain basic protections to the investors of one state investing in another. The first BIT was signed by India on March 14, 1994. Since then till date the government has signed BIT with more than 83 countries.
�Positive Impacts of Indian BIT�

  • The investors of other countries feel safe
  • The rights of the investors are protected
  • It provide investors several guarantees which typically include�fair and equitable treatment, protection from expropriation, free transfer of means and full protection and security

Drawbacks of Indian BIT

  • It gave extensive protection to foreign investment but very little regard for state�s interests
  • There were design flaws
  • There were inordinate delays in deciding on the enforceability of arbitration awards
  • The judiciary ruled in certain cases without examining India�s BIT obligations
  • In India there were less rationale state regulation
  • The state entities have no full knowledge of India�s obligations under BITs
  • In 2016, India has unilaterally terminated bilateral investment treaties with more than 60 countries. There is around 50% of the total unilateral termination of BITs globally from 2010 to 2018
  • Unilateral termination of BITs on such a mass scale projects India as a country that does not respect international law

India was being sued by several foreign investors before international arbitration tribunals.India has adopted a new inward-looking Model BIT in 2016 that prioritises state interests over protection to foreign investment.


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