Which one of the following statements best describes a ‘Bilateral Investment Treaty (BIT)’?
(a) It is a trade agreement to liberalize tariffs between two countries.
(b) It is an agreement that allows companies to bypass local courts in resolving commercial disputes.
(c) It is a reciprocal agreement between two countries to promote and protect private foreign investments.
(d) It is a treaty that facilitates the exchange of financial data to prevent tax evasion.

Question

Which one of the following statements best describes a &lsquo;Bilateral Investment Treaty (BIT)&rsquo;?
(a) It is a trade agreement to liberalize tariffs between two countries.
(b) It is an agreement that allows companies to bypass local courts in resolving commercial disputes.
(c) It is a reciprocal agreement between two countries to promote and protect private foreign investments.
(d) It is a treaty that facilitates the exchange of financial data to prevent tax evasion.

ONLiNE UPSC · Accepted Answer

Context: Recently, BITs was in news as an announcement was made in the Union Budget 2025 regarding the revision of the model Bilateral Investment Treaty (BIT) text to make it more investor-friendly.
A Bilateral Investment Treaty (BIT) is a legally binding agreement between two countries that aims to promote and protect foreign private investments. It includes provisions like national treatment, fair and equitable treatment, and protection from expropriation, ensuring that foreign investors are treated fairly and their assets are safeguarded under international standards. These treaties are vital for encouraging cross-border investment by reducing political and legal risks.

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Bilateral Investment Treaties (BITs)

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M Question 1	⏱ 0
Which one of the following statements best describes a ‘Bilateral Investment Treaty (BIT)’? (a) It is a trade agreement to liberalize tariffs between two countries. (b) It is an agreement that allows companies to bypass local courts in resolving commercial disputes. (c) It is a reciprocal agreement between two countries to promote and protect private foreign investments. (d) It is a treaty that facilitates the exchange of financial data to prevent tax evasion.