Bridging the Legal Protection Gap: Evaluating Outbound Investment Safeguards for Indian Investors in the Indo-Pacific

Abstract

As India transitions from a capital-importing economy to an increasingly influential source of Outward Direct Investment (ODI), the adequacy of legal safeguards protecting Indian investors abroad has become a critical concern within the broader Indo-Pacific framework. This study, titled “Bridging the Legal Protection Gap: Evaluating Outbound Investment Safeguards for Indian Investors in the Indo-Pacific,” examines the evolving architecture of investor protection with particular reference to the India–Australia investment corridor. The analysis situates this bilateral relationship within India’s post-2017 shift in international investment policy following the termination of several Bilateral Investment Treaties (BITs). The resulting “legal protection gap” is explored through the lens of fragmented mechanisms, including trade agreements such as the Economic Cooperation and Trade Agreement (ECTA), the operation of sunset clauses under terminated BITs, and reliance on host-state domestic legal systems. The paper critically evaluates the transition away from Investor-State Dispute Settlement (ISDS) towards “local remedies first” approaches, assessing their implications for legal certainty, investor confidence, and dispute resolution efficiency. Focusing on strategic sectors such as critical minerals, the study highlights the vulnerabilities faced by Indian investors in advanced economies despite robust regulatory environments. By situating the India–Australia case within broader Indo-Pacific investment dynamics, the paper identifies systemic gaps in India’s outbound investment protection strategy. The study concludes by emphasizing the urgent need for a comprehensive and enforceable investment protection framework, recommending the inclusion of a robust Investment Chapter within the proposed Comprehensive Economic Cooperation Agreement (CECA). Such reforms are essential to provide “hard law” certainty and to support India’s long-term economic vision under the Viksit Bharat 2047 agenda.