India-Kyrgyz Bilateral Investment Treaty Comes into Force, Boosts Economic Ties

On 5th June 2025, India and Kyrgyzstan marked a significant moment in bilateral diplomacy as Union Finance Minister Smt. Nirmala Sitharaman and Kyrgyz Foreign Affairs Minister Mr. Zheenbek Kulubaev Moldokanovich formally exchanged the Instrument of Ratification of the Bilateral Investment Treaty (BIT) in New Delhi. This event signifies the official enforcement of the treaty originally signed on 14th June 2019 in Bishkek, replacing the earlier BIT enforced on 12th May 2000.

The BIT provides a refreshed framework to promote and protect foreign investments, aiming to boost cross-border economic cooperation and mutual investor confidence between India and the Kyrgyz Republic.

Key Features of the India-Kyrgyz BIT

The new BIT adopts a modernized legal architecture aligned with India’s reformed investment treaty model, reflecting a careful balance between investor rights and the host nation's sovereign regulatory powers. Here are the pivotal components of the treaty:

1. Sustainable Development Focus

The preamble now includes a clear emphasis on sustainable development, signaling a commitment to responsible and inclusive economic growth.

2. Asset Definition and Scope

• Introduces an enterprise-based definition of investment, supported by an inclusive list of qualifying assets.

• Excludes specific categories—such as short-term interests and public debt—from the definition, ensuring that only genuine long-term investments are protected.

• Clearly outlines investment characteristics: capital commitment, profit expectations, risk assumption, and contribution to host state development.

3. Policy Space and Exclusions

To preserve national sovereignty, the BIT excludes key sectors from its purview:

• Local government functions

• Government procurement

• Taxation matters

• Compulsory licensing

• Sovereign public services

This ensures that governments retain the freedom to implement policies in these crucial areas.

4. Balanced Investment Treatment

• Avoids overreach by excluding Most Favored Nation (MFN) clauses, which previously enabled investors to cherry-pick the most favorable provisions from other treaties.

• Enshrines protections like National Treatment, Expropriation Standards, and Free Transfers, drawn from customary international law, without compromising public interest.

5. Robust Exceptions Framework

The BIT incorporates:

• General Exceptions: For protecting environment, public health, safety, morality, and order.

• Security Exceptions: Allowing measures necessary to protect national security interests.

These carve-outs grant both parties a robust policy space.

6. Calibrated Dispute Resolution

• Introduces a tiered Investor-State Dispute Settlement (ISDS) mechanism.

• Requires mandatory exhaustion of local remedies before invoking international arbitration.

• Promotes alternative dispute resolution methods such as mediation or conciliation.

Strategic and Economic Implications

This updated treaty not only reassures investors by creating a predictable and transparent investment climate, but also aligns with India’s vision of recalibrated investment treaties that prioritize sustainable development and national policy autonomy.

For Kyrgyzstan, it opens avenues to attract Indian investment, particularly in sectors like information technology, pharmaceuticals, education, and infrastructure. For India, it strengthens its foothold in Central Asia, strategically located along critical trade and energy routes.

Accessing the BIT

The full text of the India-Kyrgyz BIT can be accessed through the Department of Economic Affairs website, offering detailed insights into its legal and procedural framework.

As global economic dynamics evolve, the enforcement of the India-Kyrgyz Bilateral Investment Treaty is a testament to the mutual resolve of both nations to deepen economic ties, while also adapting to the imperatives of responsible, future-focused investment governance.