India Investing

Legal Risks

India Investing

1. FDI / FEMA Structuring 2. Beneficial Ownership and Control Risk 3. Tax Treaty, GAAR, and Substance Risk 4. Sectoral Licensing and Approval Risk 5. Promoter Governance and Post-Close Leakage Risk 6. Anti-Bribery, Sanctions, and Government-Touchpoint Risk 7. Data Protection, AI, and Cyber Risk 8. Competition and Gun-Jumping Risk 9. Land, Title, and Environmental Risk 10. Exit and Enforcement Risk 11. Investment Treaty Protection Gap
11

Investment Treaty Protection Gap

Domestic: N/A Foreign: Critical

Many foreign investors assume they hold bilateral investment treaty (BIT) protections as a backstop against adverse regulatory action in India.

India terminated approximately 75 BITs in 2016–17. Terminated treaties continue to protect existing investments under 'sunset' or 'survival' clauses, typically for 10–15 years post-termination.

A revised Model BIT is now underway — confirmed by India's Ministry of Finance in February 2026 that the new text will be 'more investor-friendly'. As of August 2026, the revised model is near completion and is expected to be presented to the Union Cabinet shortly.

Key Risk Areas

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    India's new trade agreements — including the India-UK CETA (signed 2025, in force April 2026) and the India-EU FTA (signed 2026) — establish only state-to-state obligations and expressly exclude investor-state dispute settlement (ISDS) This marks a clear departure from older treaties such as the 2011 India-Japan CEPA, which included investment protections and ISDS

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    Practical implication: for US, Japanese, and European investors in particular, the absence of effective treaty protection means contractual architecture carries all of the weight that BIT protections once shared.
    This makes investment documentation more, not less, important

This risk is foreign investor-specific. There is no domestic equivalent.

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