India’s effort to revise its Model Bilateral Investment Treaty (BIT) comes nearly a decade after the revised model was approved in 2015. The Union Budget 2025-26 had announced that the model would be revamped and made more investor-friendly. The review comes as both India’s treaty practice and the international investment regime are changing. The question, therefore, is not simply whether India should offer investors more or less protection. It is about what India has learnt from the past decade and how those lessons should shape its new model.

A cautious framework

India’s 2015 Model BIT emerged from a particular historical context. The White Industries Australia Limited vs Republic of India award (2011) and broader concerns over investor-state arbitration contributed to a cautious approach. The model adopted a narrower definition of investment, carefully framed substantive protections, regulatory exceptions and a requirement to exhaust all judicial and administrative remedies for at least five years before commencing treaty arbitration.

India’s position has since evolved. It has concluded new-generation investment agreements with the United Arab Emirates (UAE), Uzbekistan and Israel. The India-UAE BIT provides for a three-year period for pursuing local remedies rather than the five-year period under the 2015 Model. The India-Israel Bilateral Investment Agreement (BIA), which entered into force in July 2026, similarly provides for a three-year period for pursuing local remedies. These agreements indicate greater flexibility in India’s treaty practice since 2015.

A Model BIT is generally not a rigid template but a starting point for negotiations. It signals to potential treaty partners the protections and obligations a state seeks, while allowing individual treaties to reflect the circumstances and priorities of the parties.

The new model should therefore provide a clear framework for India’s future treaty negotiations, while leaving sufficient room for necessary adjustments in individual agreements. It is here that the contributions of Makane Moïse Mbengue are relevant. His scholarship teaches that a developing state need not always be a rule-taker under international investment law, but can also be a rule-shaper through its treaty practice. India’s revamp of its Model BIT offers a similar opportunity.

The international context has also changed. The United Nations Trade and Development (UNCTAD) points to a shift toward investment facilitation, cooperation, sustainable development and more carefully defined investor protections, with less reliance on traditional investor-state dispute settlement (ISDS). The United Nations Commission on International Trade Law (UNCITRAL) is examining reforms to the ISDS, including a permanent tribunal and appellate mechanism, damages and compensation, and dispute prevention. India’s revised Model BIT must therefore respond to a changing investment regime, not merely revisit the 2015 Model.

What a new model must factor in

The new model must consider whether to include the Most Favoured Nation (MFN) provision. In most investment treaties entered into by India, the MFN provision is absent, reducing the possibility for an investor to claim better protection under other treaties. However, if the new model includes this provision, it should be very clear about its scope. In Emilio Agustín Maffezini vs Kingdom of Spain, an MFN clause was used to bypass an 18-month local-court requirement by relying on more favourable dispute-settlement provisions in another treaty. Plama Consortium Limited vs Republic of Bulgaria rejected the importation of such provisions in the absence of a clear treaty provision. Recent treaty drafting also provides examples of expressly excluding dispute-settlement procedures from the scope of MFN clauses. The scope of the MFN provision should therefore be defined, particularly in relation to dispute settlement.

Investor obligations are another aspect of recent Indian practice that can help set a foundation for the new model. Under the India-Uzbekistan BIT, a state is expressly permitted to assert a counterclaim against an investor or investment. The new model can take a cue from this practice and lay down investor obligations and the circumstances in which counterclaims can be asserted.

The provision on dispute settlement also calls for reassessment. The five-year requirement to exhaust all judicial and administrative remedies under the 2015 Model could be assessed against the practices adopted by India since then. The three-year period for pursuing local remedies used in the India-UAE and India-Israel investment agreements shows greater flexibility in India’s approach. The Model BIT may also provide for more effective consultation and dispute-prevention procedures prior to arbitration, which are being discussed at UNCITRAL Working Group III.

Need for precision, clarity

The substantive protections should be equally precise. Clarity of language concerning expropriation and fair and equitable treatment (FET) could help avoid confusion in interpretation while safeguarding the right of the state to regulate for the public good. Sustainable development and responsible investment must not be left as policy declarations. Where India wishes to impose obligations on investors, those obligations should be expressed in clear legal terms. The changes need not make the new model uniformly more favourable either to investors or to states. The aim should be a model that is clearer, more workable and better suited to India’s position today, while allowing room for necessary adjustments in individual treaties.

With the revised model now reportedly finalised and awaiting Cabinet approval, the key question will be whether its final text adequately reflects the lessons of India’s treaty experience over the past decade while providing a coherent framework for future negotiations.

Jyoti Singh is an advocate based in Delhi and has been a legal consultant to the Department of Economic Affairs, Government of India