India's 2015 Model BIT prioritised regulatory sovereignty over investor protection. In light of India's recent treaties with the UAE and Israel, critically examine whether the balance needs recalibration.

The Union Cabinet approved India's Model BIT in 2015 [1]. It was a defensive response to the 2011 White Industries award, India's first adverse treaty award [3]. Its enterprise-based definition of investment, its carve-outs and its strict ISDS rules protected regulatory space [1]. India's newer treaties show that this balance needs careful recalibration, not abandonment.

Merits of the sovereignty-first model

• Taxation, compulsory licences, subsidies, government procurement and national security are excluded. Tribunals can award only monetary compensation [1].
• The exposure is real. India received 37 dispute notices and paid one award, at a "significant cost to the exchequer" [4]. Claims challenged retrospective taxes and telecom licence cancellations [3].

Costs and limitations

• Fewer treaties: India terminated older BITs with 77 countries but signed new agreements with only 4 [4]. This also left Indian investors abroad without treaty cover.
• A long wait: investors must exhaust local remedies for at least five years before going to arbitration [2]. This deters partner countries.
• Drafting gaps: the Standing Committee on External Affairs (2021) asked for unambiguous drafting and for the ISDS mechanism to be fine-tuned [4].

What the UAE and Israel treaties signal

• UAE BIT (in force 31 August 2024) [6]: it uses a closed asset-based definition that covers portfolio investment and sets a 3-year local-remedies period. It still keeps the tax and compulsory-licence carve-outs [5].
• It assures a minimum standard of treatment while keeping the State's right to regulate. The UAE is India's seventh-largest FDI source [6].
• Israel BIA: it offers a minimum standard of treatment and an independent arbitration mechanism [7].
• India is therefore already recalibrating deal by deal. Budget 2025-26 promised a revamped, "more investor-friendly" model [8].

Way forward

• Codify UAE-type terms in the new model to end case-by-case inconsistency.
• Keep the core carve-outs, and define any treatment standard through closed lists.
• Build domestic legal expertise and promote the New Delhi International Arbitration Centre [4].
• Align with the UNCITRAL Working Group III reforms, including a multilateral instrument [9].

The 2015 model protected policy space, but it cost India treaty partners. The UAE and Israel deals show a middle path: assured treatment, quicker access to arbitration and preserved carve-outs. A revised model built on this template can attract long-term FDI in the spirit of "first develop India" [8] while upholding the State's right to regulate in the public interest.