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Why India may revive 'Most-Favoured-Nation' rule in bilateral treaties

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Why India may revive 'Most-Favoured-Nation' rule in bilateral treaties

Home / Economy / News / Why India may revive 'Most-Favoured-Nation' rule in bilateral treaties

India dropped the MFN clause from its 2016 Model BIT after an investment dispute raised concerns over its broad use. Now, a limited MFN rule is reportedly under consideration

India is considering a qualified MFN provision in its revamped investment treaty framework after excluding MFN from the 2016 Model BIT. (AI-generated image)

Akshita Singh New Delhi 6 min read Last Updated : Aug 31 2026 | 2:22 PM IST

India is reportedly considering a limited form of the Most-Favoured Nation (MFN) provision as part of the proposed overhaul of its bilateral investment treaty (BIT) framework. However, the move would not restore the broad MFN clause that was removed from India's model BIT nearly a decade ago.

According to a report in The Financial Express , the proposed framework could allow a qualified MFN provision in investment treaties with large economies, including major trading partners such as the European Union (EU).

The provision would be designed to give investors greater certainty without allowing them to rely on provisions from unrelated third-country treaties to make wider claims.

The proposal is part of a broader review of India's investment treaty framework. The Finance Ministry has circulated a draft Cabinet note proposing changes to the existing model, including a wider definition of investment and changes to the investor-state dispute settlement mechanism, Business Standard reported earlier this month.

MFN is a non-discrimination provision. In an investment treaty, it generally requires a country to provide investors from one treaty partner treatment no less favourable than that available to investors from another treaty partner.


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