5-year litigation requirement
A key level of Bhalla’s criticism is the 2016 Mannequin BIT’s requirement that international traders pursue home authorized cures for 5 years earlier than initiating worldwide arbitration.
“Earlier than going to worldwide arbitration, a international investor needed to litigate in Indian courts for 5 years,” Bhalla wrote. He contrasted this with the three-to-six-month session intervals usually adopted internationally, throughout which events try and resolve disputes earlier than arbitration.
“India requested for 10 occasions that, in a judicial system the place 5 years doesn’t produce a judgment anyway,” he mentioned.
Bhalla argued that the supply didn’t essentially enhance dispute decision however as a substitute created extended uncertainty for traders. India’s subsequent funding treaties with the UAE in 2024 and Israel in 2025 lowered the requirement to 3 years, though Bhalla mentioned this stays considerably longer than the worldwide norm.
Treaty community contracts
Bhalla highlighted the sharp contraction in India’s funding treaty community following the 2016 framework. In keeping with figures cited in his column, treaties in power declined from 73 in 2015 to 29 in 2017, 16 in 2019 and eight by 2021, the place the quantity remained for one more 4 years.
“India has been essentially the most obstructionist member of the WTO. With the ‘Mannequin’ BIT, it went on to assemble essentially the most obstructionist funding treaty on this planet,” Bhalla wrote.
He argued that the decline in treaties must be seen alongside India’s broader international funding figures, reasonably than relying solely on headline gross FDI numbers.
Gross FDI versus internet funding
India recorded gross FDI inflows of $94.5 billion in 2025-26, in response to figures cited by Bhalla. Nevertheless, international traders repatriated or disinvested $53.6 billion, whereas Indian corporations invested $33.3 billion overseas, leaving internet FDI at $7.65 billion, he mentioned.
Bhalla additionally pointed to $25.6 billion in reinvested earnings by international corporations. He argued that retained earnings mustn’t routinely be seen as recent commitments of international capital.
“The price of what we did just isn’t what we misplaced. It’s what we’ve got been forgoing, 12 months after 12 months,” Bhalla wrote.
The controversy over the Mannequin BIT comes as India seeks to draw larger international funding whereas negotiating commerce and funding preparations with main economies. Bhalla’s central argument is that policymakers ought to focus not solely on capital already coming into India but additionally on funding that might probably come beneath a extra predictable treaty framework.
“We all know, and have identified, what the proper coverage is to comply with. But, we don’t enable the proper coverage to occur,” he wrote.
