New BIT, New Beginnings: India and Kyrgyzstan Forge a Dynamic Economic Alliance

Image Source: ANI News

India and Kyrgyzstan are making significant strides in strengthening their economic ties with the introduction of a new Bilateral Investment Treaty (BIT), set to take effect on June 5, 2025. This important agreement replaces the treaty from 2000 and is expected to greatly boost cross-border investments and economic collaboration between the two countries.

Key Highlights

Treaty Comes into Force: The new BIT, which was initially signed in Bishkek in June 2019, officially takes the place of the earlier agreement from May 2000, ensuring that investments from both nations continue to be protected.
High-Level Signing: The enforcement protocol was signed in New Delhi by India’s Finance Minister Nirmala Sitharaman and Kyrgyz Foreign Affairs Minister Zheenbek Kulubaev Moldokanovich, marking a significant moment in their bilateral relations.
Balanced Approach: This treaty aims to strike a balance between investor rights and the regulatory powers of both countries, showcasing a mutual commitment to fostering a resilient and transparent investment environment.
Focus on Sustainable Development: The BIT's preamble highlights the importance of sustainable development and removes the Most Favoured Nation (MFN) clause, aligning with global best practices.
Policy Flexibility: The BIT introduces general and security exceptions, giving both governments the flexibility to implement policies for environmental protection, public health, safety, and public order. Sensitive areas such as local government, taxation, government procurement, and compulsory licenses are excluded to preserve regulatory independence.
Dispute Resolution: The treaty enhances the Investor-State Dispute Settlement mechanism, requiring that local remedies be exhausted before moving to international arbitration, thus providing a stronger framework for resolving disputes.
Wider Cooperation: In addition to the BIT, both nations discussed ways to expand cooperation in areas like banking, education, energy, health, and connectivity, with a particular focus on establishing direct banking relations and increasing investment in priority sectors.

This agreement is expected to further encourage cross-border investments, foster economic growth, and strengthen the strategic partnership between India and Kyrgyzstan.

Source: The Economic Times, Deccan Chronicle, The Hindu Business Line, Business Standard, The Hans India