Abstract

India revised its model bilateral investment agreement (BIT) in 2016 where it offered more restrictive protection mechanism to its foreign investors. This revision increases the regulatory freedom of India as host state to uplift its workers' welfare. The host states commonly attract foreign investors in the Special Economic Zones (SEZs) with a comparatively more investor-friendly worker regulation therein. Hence, this freedom is limited in the SEZs. India is also not an exception. This paper scrutinizes the regulatory flexibilities of India to uphold the workers' welfare in SEZs compromising the legitimate expectation of foreign investors under international investment law. The findings show, India enjoys more regulatory freedom as host state and also has the inclusive approach in statutory law for the workers regardless of their place of employment. Yet, the unfettered power of the state government to exempt the application of labor laws in the SEZs and delegation of offices with conflicting interests make the worker welfare unachievable. India strategized to avoid the liability as host state to the investors with restrictive BITs but attract foreign investment simultaneously by these exemptions. However, the fewer number of BITs completed after the shift raises a doubt as to its success of the strategy.

This paper will be part of the upcoming TDM Special Issue on "The Interaction Between International Investment Law and Special Economic Zones (SEZs)". More information here www.transnational-dispute-management.com/news.asp?key=1771