India-Kyrgyzstan Bilateral Investment Treaty (BIT) Comes Into Force, Ushering in a New Era of Economic Cooperation and Growth: June 2025

New Delhi, 5 June 2025 – In a landmark development for regional economic cooperation, Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, and the Minister of Foreign Affairs of the Kyrgyz Republic, Mr. Zheenbek Kulubaev Moldokanovich, officially signed the Protocol and exchanged the Instrument of Ratification for the India-Kyrgyz Bilateral Investment Treaty (BIT) today in New Delhi. The treaty, originally signed on 14th June 2019 in Bishkek, has now come into force as of 5th June 2025, replacing the previous agreement enforced on 12th May 2000.

This marks a significant milestone in the evolution of bilateral investment relations between India and Kyrgyzstan and is aimed at fostering a more secure, sustainable, and predictable investment climate.

🔑 Key Objectives of the India-Kyrgyzstan Bilateral Investment Treaty

The newly ratified BIT represents the shared vision of both nations to deepen economic cooperation while preserving regulatory sovereignty. Designed in accordance with modern investment treaty practices, the treaty introduces a robust framework that:

• Promotes and protects the interests of investors from both countries.

• Encourages cross-border investments.

• Builds a resilient and transparent investment ecosystem.

The BIT’s structure reflects a forward-looking approach that aligns with India’s newer model of investment treaties, emphasizing balance, sustainability, and dispute resolution.

🧩 Notable Features of the Treaty

1. Sustainable Development at the Core
   The preamble emphasizes sustainable development, signaling both countries’ commitment to investment practices that support economic, environmental, and social progress.

2. Enterprise-Based Definition of Investment
   The BIT offers a clear definition of investment, using an enterprise-based model with an indicative inclusion list. It also includes a specific exclusion list of assets and outlines key investment characteristics such as:

   • Capital commitment

   • Expectation of profits

   • Assumption of risk

   • Economic significance for the host state

3. Policy Space Protection for Governments
   Certain sensitive areas have been excluded from the BIT’s purview, ensuring that both governments retain adequate policy space. These include:

   • Local government matters

   • Government procurement

   • Taxation

   • Services under governmental authority

   • Compulsory licenses

4. Balanced Investor Protections
   The BIT ensures fair treatment by defining the core elements of Treatment of Investment in line with customary international law. Key protections include:

   • National treatment

   • Compensation for expropriation

   • Unrestricted transfer of returns and profits

5. Exclusion of the MFN Clause
   The Most Favored Nation (MFN) clause, which had previously allowed investors to “import” more favorable provisions from other treaties, has been deliberately excluded to avoid selective treaty shopping and maintain consistency in treaty obligations.

6. Robust Exceptions Framework
   To safeguard regulatory autonomy, the BIT incorporates:

   • General exceptions for environmental protection, public health and safety, public morals, and public order.

   • Security exceptions allowing policy flexibility during national security crises or emergencies.

7. Calibrated Dispute Resolution Mechanism
   A significant innovation in this BIT is the introduction of an Investor-State Dispute Settlement (ISDS) mechanism that mandates the exhaustion of local remedies before international arbitration. This encourages institutional trust, reduces frivolous litigation, and ensures that both countries’ legal systems are respected.

🌏 Strengthening Regional and Global Investment Integration

This new agreement comes at a time when India is actively recalibrating its foreign investment treaties to strike a balance between investor protection and sovereign policymaking space. The India-Kyrgyz BIT is seen as a model for future treaties, reflecting India’s commitment to responsible globalization and sustainable economic partnerships.

It also holds strategic importance for Central Asia, as India continues to engage with the region under its “Connect Central Asia” policy, aiming to expand trade, investment, and connectivity with countries like Kyrgyzstan.

🔚 Conclusion: Towards a Resilient Investment Future

The operationalization of the India-Kyrgyzstan Bilateral Investment Treaty represents a new era of economic cooperation grounded in mutual respect, transparency, and policy pragmatism. By promoting cross-border investments and defining clear investor rights and obligations, the treaty serves as a cornerstone for enhancing bilateral trade and long-term economic integration.

As both countries celebrate this crucial milestone, the BIT is poised to catalyze greater business confidence, promote strategic investments in critical sectors, and foster inclusive economic development. In doing so, it also signals India’s broader ambition to be a reliable investment partner and global economic leader in a changing world order.

For more details check press release on PIB website.

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