What happened?
On June 5, 2025, India’s Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman, and the Kyrgyz Republic’s Minister of Foreign Affairs, Zheenbek Kulubaev Moldokanovich, signed the Protocol and exchanged the Instrument of Ratification of the Bilateral Investment Treaty (BIT) in New Delhi. The BIT, originally signed on June 14, 2019, in Bishkek, officially came into force on June 5, 2025, replacing an earlier agreement from May 12, 2000. This new BIT aims to promote and protect the interests of investors from both countries. Key features of the treaty include an emphasis on sustainable development, an enterprise-based definition of assets, and the exclusion of matters like local government and taxation to retain policy space for the government. The BIT also defines the core elements of investment treatment as found in customary international law and ensures a balanced framework with provisions on national treatment, expropriation, and transfers. Notably, the Most Favored Nation (MFN) clause has been removed. The treaty includes general and security exceptions to carve out policy space for the state, covering areas such as environmental protection, public health and safety, and public morals. A calibrated Investor-State Dispute Settlement mechanism with mandatory exhaustion of local remedies is also part of the BIT.
Why it matters to India
The India-Kyrgyzstan BIT holds significant strategic importance for India by fostering a secure and predictable investment environment, which is crucial for strengthening bilateral economic relations. The treaty’s provisions, particularly the emphasis on sustainable development and a balanced framework for investor rights and sovereign regulatory powers, align with India’s broader economic and geopolitical goals of promoting responsible and resilient cross-border investments. By encouraging greater economic cooperation, the BIT is expected to facilitate Indian investments in Kyrgyzstan and vice-versa, thereby diversifying India’s investment portfolio and potentially opening new markets for Indian businesses and industries.