India to Include Portfolio Investors in New Bilateral Investment Treaties With Easier Arbitration Access
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TL;DR
- India to include portfolio investors in new bilateral investment treaties (BITs)
- Easier access to international arbitration for FPIs
- Model 2015 BIT previously excluded FPIs, the new model seeks to address this
- Global arbitration access period to be reduced to two years
Overview
India is preparing new bilateral investment treaties that will specifically include foreign portfolio investors (FPIs) and provide them with improved access to international arbitration. The changes are designed to offer greater certainty for portfolio investors regarding the treatment of their investments in India.
What Happened
According to government sources cited in the report, the upcoming bilateral investment treaties (BITs) will reverse the exclusion of portfolio investors included in India's Model 2015 BIT.
The updated BITs are expected to contain safeguards for FPIs, allowing them to benefit from protections regarding the treatment of their investments in India and enhancing their rights to access international arbitration.
The report indicates that the time window for accessing global arbitration will be reduced from the current standard to two years, aiming to streamline dispute resolution.
These planned reforms are part of a broader effort to improve the investment climate and promote increased FPI participation in India.
Context
The 2015 Model BIT adopted by India previously excluded portfolio investment from its protections, focusing instead on direct foreign investment.
Foreign portfolio investors have increasingly played a significant role in Indian capital markets, and their inclusion in BITs is intended to provide uniform treatment and stronger legal safeguards.
Why It Matters
- If implemented, these reforms could make India a more attractive destination for portfolio investment by providing greater legal certainty.
- Easier access to international arbitration may enhance the enforceability of investment protections for FPIs and contribute to a more predictable dispute resolution environment.