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This is our very first special issue: a guest article on India’s Free Trade Agreement with the EU in the context of India’s investment and trade strategy.

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Today’s guest authors are fellow Risers.

Lawyers by training, Kanwar Vivswan (Associate with Osborne Clarke) and Janine Haesler (Senior Associate with Vischer) are both active in the Indo-European business corridor and thanks to their specialization in litigation, well versed in cross-border developments.

Let’s jump in!

From Kanwar Vivswan and Janine Haesler

India’s economy is expanding rapidly, with a 8.2% growth rate in 2023, making it one of the world’s fastest-growing major economies. The IMF projects India to be the fastest growing major economy for the next two years in real GDP terms, at a rate almost double the world output average. With a workforce of over 500 million and a projected consumer market set to become the world’s second largest by 2030, international interest in India has never been higher.

However, global trade tensions, from rising tariffs to protectionist policies, are pushing India to craft trade agreements that fuel growth while safeguarding its interests.

This article examines India’s approach to trade and investment agreements, weaving in legal insights to show how these deals are designed. We will dive into India’s recent pact with European countries including one with the UK, its ongoing negotiations with a number of global partners, and whether these deals could be a template for the EU-India FTA.

India relies on two key tools to boost its economy through global trade and investment:

From the 1990s to 2015, India signed BITs with 83 countries using a 1993 model. After facing legal challenges from foreign investors claiming unfair treatment, India introduced a new Model BIT 2015. This model prioritizes India’s regulatory freedom while offering investor protections. For example, investors must first seek remedies in Indian courts for five years before resorting to international arbitration.

The 2015 BIT also narrows investor protections to avoid vague obligations. It excludes broad “fair and equitable treatment” clauses, which investors often use to challenge government policies and emphasizes clear standards like treating foreign investors as fairly as Indian ones. This legal clarity attracts investment while reducing dispute risks.

India’s FTAs reflect a similar strategy. Recent deals with

focus on trade benefits rather than sweeping investor protections.

India's evolving approach to FTAs and BITs underscores its commitment to fostering international trade and investment while safeguarding its regulatory autonomy and national interests.

In her 2025-2026 budget speech, India’s Finance Minister Nirmala Sitharaman signalled plans to update the BIT model to be more investor-friendly, aligning with the “First Develop India” vision. This could streamline rules for foreign businesses in India, potentially creating jobs and boosting industries like manufacturing and tech.

On March 10, 2024, India signed the Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA), comprising Switzerland, Norway, Iceland, and Liechtenstein. This pioneering deal with non-EU European nations promises $100 billion in investments over 15 years, potentially creating 1 million direct employments in India, through such investments. It also eliminates taxes on many industrial goods, enabling Indian firms to export products like textiles and chemicals more easily and giving consumers access to high-quality European goods.

Legally, TEPA avoids broad commitments like “fair and equitable treatment” or guarantees against property seizure without compensation, opting for specific rules in each chapter (e.g., Articles 2.7, 6.3). In addition, only governments—not private companies—can raise disputes in an arbitration. Instead, private investors have to resort to ordinary methods of dispute resolution and provide for specific arrangements in their individual contracts in the form of forum selection or arbitration clauses.

On May 6, 2025, India and UK successfully concluded their talks on an FTA. The content of this FTA is comparable to TEPA. The India-UK FTA yielded key achievements in the areas of labor migration, tariff reductions and agriculture. In addition, the India-UK FTA provides for a similar dispute resolution mechanism as TEPA, providing for a government-led dispute settlement mechanism thereby limiting the role of full-fledged arbitration proceedings. The full details of the FTA are expected to be finalized and published shortly.

The agreements that India has concluded with the EFTA countries and the United Kingdom will hopefully set the tone and pace for two other important FTAs which are in the pipeline with the EU and the US. At the same time, the negotiated frameworks could serve as guideposts for these negotiations, illustrating both India's demands and its willingness to make concessions.

In its effort to reshape its foreign investment and trade regime, India is currently negotiating and renegotiating key trade and investment agreements with major global partners.

The European Union is India's largest trading partner and a respective trade deal of critical importance. The Indo-European trade recorded €125 billion in goods and €60 billion in services trade in 2023. FTA negotiations, relaunched in 2021, target completion by late 2025. Challenges include EU taxes on Indian cars and alcohol and environmental regulations like carbon taxes on steel and cement. Both sides are aligning on state-led dispute resolution, reflecting India’s preference for legal clarity. This deal could open European markets for Indian firms and attract EU investment. In terms of dispute settlement, it is likely that India will advocate for its more nuanced approach, as in reflected in TEPA.

In parallel, India is in negotiations with the further major partners, including the following:

The ongoing negotiations with the European Union, the U.S. and the ASEAN states underscore India’s focus on global integration while safeguarding its legal and economic sovereignty.

India’s new investment and trade strategy is about unlocking opportunities for its people. Agreements like TEPA can drive home billions in investment, create millions of jobs, and make goods more affordable. EFTA’s $100 billion pledge could spark growth in sectors like renewable energy and pharmaceuticals, benefiting workers and businesses nationwide. Lower taxes on goods help Indian firms compete globally and give consumers access to diverse products at better prices.

Legally, India’s dispute resolution approach is a strength. By limiting investor-led lawsuits and prioritizing state-to-state mechanisms, India protects its ability to regulate in the public interest—whether it is environmental policies or labour laws. This minimizes costly legal battles, preserving public resources and maintaining economic trust.

India’s current approach to negotiating BITs and FTAs seeks to balance foreign investors’ rights with the state’s sovereign right to regulate. The EFTA TEPA and India-UK FTA demonstrate how India can attract investment while protecting its priorities, offering a potential template for deals with the US, EU, and beyond.

For businesses, workers, and consumers, these deals make it cheaper and easier to trade and reduce red-tape, and tariffs. At the same time, the new investment and trade strategy may offer significant opportunities for foreign investors and trade partners to access the Indian market by bringing down barriers to trade and creating diverse and resilient supply chains.

Sources: IMF, Electronic Database of Investment Treaties, Government of India, Hindustan Times, EFTA Trade Statistics, India Rising, Government UK, European Commission, World Economic Forum, Moneycontrol, United States Trade Representative, Indian Express

If you want to explore more on this topic or have questions, please reach out to the authors here:

[email protected] and [email protected]

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