India and Bilateral Investment Treaties: From Rejection to Embracement to Hesitance?

Abstract

This chapter will study the evolution of India’s approach to bilateral investment treaties (BITs) since 1947. The chapter will trace this evolution by dividing the time period from 1947 to date in three phases. In the first phase, from 1947 till 1990, India didn’t undertake international treaty obligations in the form of BITs to protect foreign investment in India primarily because of import substitution economic policies. However, this started to change in early 1991—the second phase of this study. In this phase, India decided to lift her self-imposed insulation from the global economy and unleashed major structural adjustments and macro-economic reforms, of the kind never undertaken before. Due to this changed economic approach, India’s approach towards BITs also changed. India started signing BITs with many countries aimed at protecting foreign investment. This launch and expansion of signing BITs continued till 2010. Post 2010, we are witnessing the third phase of India’s approach towards BITs. In this phase, India started critically reviewing her BITs in the aftermath of numerous BIT claims brought by foreign investors against India. A critical step in this phase has been the adoption of the 2016 Model BIT. This development points towards India’s new investment treaty practice, which does not put the same faith in BITs as the second phase. The chapter will conclude by observing that India’s new investment treaty practice should evolve in a manner that reconciles investment protection with the host State’s right to regulate.