Examine the role of Bilateral Investment Treaties (BITs) in complementing Free Trade/CEPA agreements, with reference to India's current negotiating approach.

Trade agreements liberalise the movement of goods and services; BITs secure the capital that must follow. India's Model BIT text was itself approved for use in negotiating investment chapters of CEPAs and FTAs [3], making the two instruments complementary rather than alternative.

How BITs complement CEPAs

• Coverage gap: CEPA chapters concentrate on trade in goods, services, rules of origin, IP, SPS and TBT — as seen in the second round of India-Canada CEPA talks (May 2026) [1]. BITs add post-establishment protection: national treatment, due process and protection against arbitrary expropriation [3].
• Investor confidence: tariff concessions alone rarely trigger FDI; treaty-backed policy predictability converts market access into actual factory-level investment.
• Dispute settlement: trade pacts rely on state-to-state consultation, while BITs offer investor-State recourse, tempered in India's template by prior exhaustion of local remedies [3].
• Supply-chain depth: capital protection underpins sectors like critical minerals, where India and Canada agreed to explore supply-chain cooperation [2].

India's current negotiating approach

• Parallel-track diplomacy: at the inaugural India-Canada Finance Ministers' Economic and Financial Dialogue (Toronto, August 2026), India offered to begin BIT negotiations "at the earliest", alongside the commitment to conclude CEPA by end-2026 [2].
• Regulatory space first: the Model BIT excludes taxation, government procurement, subsidies, compulsory licences and national security from its scope [3] — protective of sovereign policy room, but a reason few partners have signed on since India terminated most older BITs [5].
• Course correction: Budget 2025-26 announced that the Model BIT would be revamped and made more investor-friendly [4], signalling a shift from defensive to facilitative treaty-making.
• Institutional layering: a Commerce-led trade track and a Finance-led investment-and-payments track now advance in tandem [1][2].

BITs and CEPAs are thus two halves of one economic-security architecture — one moves goods, the other anchors capital. A recalibrated Model BIT concluded in step with CEPA would make the USD 50 billion by 2030 trade target credible [6] and strengthen India's integration into resilient, rule-based global value chains.