India's Model BIT Challenges Global Trade Negotiations

From Saudi Arabia to the UK, the Indian government's steadfast refusal to amend its model bilateral investment treaty (BIT) is posing significant hurdles for trade negotiators and countries seeking investment arrangements with India. A recent discussion between officials hints at potential carve-outs, which could impact upcoming negotiations, including Prime Minister Narendra Modi's visit to Saudi Arabia.

The BIT issue is also expected to resurface in UK-India trade talks next month, as both sides aim to finalize a long-awaited free trade agreement (FTA). The model BIT, implemented in 2016 following a legal loss, has been a sticking point for several foreign investors, including British companies Cairn Energy and Vodafone.

India has shown flexibility with the UAE in signing an FTA, potentially setting a precedent for future negotiations. However, the UK and EU remain insistent on amendments to the investment chapter, reflecting broader concerns over the model BIT.

Sri Lanka has also raised concerns during trade agreement discussions, while Singapore and South Korea are advised to consider the earlier BIT. The model BIT's rigidity continues to challenge India's global trade and investment ambitions.