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2024 UAE–India Investment Treaty guidelines for foreign investors

How the 2024 UAE–India Investment Treaty Changes the Rules for Investors

  • Modified On: January 12, 2026

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Summary:

The 2024 UAE–India BIT replaces the older treaty and introduces a stricter, documentation-driven framework for investor protection. Only investments with clear legal structure, real economic activity, and full compliance now qualify. Eligibility rules for both individuals and entities are more demanding, and protections apply only under defined conditions. Investors must plan with stronger evidence, cleaner paperwork, and timely dispute readiness to stay covered under the treaty.

The investment relationship between India and the UAE has always been commercially agile. However, the 2024 UAE-India Bilateral Investment Treaty (BIT) marks a major shift. The new treaty is different from the earlier frameworks that offered broad and generous protections. Now, the treaty requires something more disciplined. This includes:

  • Documented proof of legitimate investment
  • Real business activity
  • Strict compliance with the regulatory expectations across both jurisdictions

For foreign investors, this is an era of structured planning devoid of assumptions.

In this edition, we have presented a practical, investor-friendly breakdown of how the 2024 BIT reshapes risk, protection, and the way cross-border investments must now be planned.

The 2024 Treaty Is the Sole Governing Framework

Since August 31, 2024, the earlier 2014 treaty has been fully replaced. All new investor protections and dispute rights must arise under the 2024 BIT, which remains in force until 2034 with a 10-year sunset clause for qualifying investments. This gives investors stability, but only if their investments meet the eligibility standards of the treaty.

For businesses considering company formation in Dubai for foreign investors, this requires structuring the investment with clear legal foundations, transparent ownership, and proper documentation to ensure compliance.

What Qualifies as a Protected Investment Is Now Narrower and More Documented

The three-part test of the treaty, involving capital commitment, expectation of profit, and assumption of risk, is the deciding factor. While the BIT now includes portfolio investments, a notable shift from the older treaty model in India. It also draws firmer boundaries on the aspects that won’t qualify.
Aspect Protected Investments Not Protected Investments
Treaty Test Must meet capital commitment, expectation of profit, and assumption of risk Not applicable, as these categories do not meet the treaty threshold
Included Items Shares, bonds, debt instruments Pre-investment activities
Included Items Tangible assets such as property and infrastructure Concession contracts in non-renewable energy
Included Items Intangible assets like IP or contractual rights Investments with incomplete regulatory approval
Compliance Requirement Must comply with local laws or treaty protection may be lost Non-compliance or incomplete approval automatically excludes protection
Investor Priority Maintain clean paperwork, lawful structuring, and proof of economic substance These steps cannot convert excluded items into protected investments

Investor Eligibility Now Requires Demonstrable Substance

The treaty expects investors, both individuals and entities, to show a genuine connection to their home jurisdiction.

For individuals:

Ordinary residence determines nationality in the case of dual citizenship.

For companies:

They must prove “substantial business activity” through:

  • Physical presence
  • Employees
  • Tax residency
  • Operational revenue
  • Active administration
This is particularly relevant for investors using holding structures or SPVs. Without real economic activity, the treaty allows states to deny protection on the grounds of treaty shopping. For UAE-based entities, maintaining proper records and obtaining a tax residency certificate in UAE becomes a crucial part of demonstrating substance.

Regulatory Outcomes Are Broader

The treaty clearly states situations where protection may not apply. These include:

  • Non-compliance with host-state laws
  • Allegations of corruption, fraud, or round-tripping
  • Beneficial owners from border-sharing countries are restricted under Indian rules
  • Public-interest measures like health, environmental controls, or monetary policy
Investors must conduct periodic compliance audits and review beneficial ownership structures to avoid unintended disqualification.

Investor Protections Still Exist

The key protections still remain, but they are narrower by design.

  • Fair and equitable treatment applies only in specific cases like denial of justice or discriminatory treatment.
  • Full protection and security apply only to physical safety.
  • National treatment applies only when investors are in “like circumstances.”
  • Expropriation protections apply, but with detailed exceptions for legitimate regulatory actions.
This means investors should anticipate regulatory changes instead of relying on earlier broad FET interpretations.

Investor Obligations Are Now Explicit and Binding

The BIT specifies the duties of investors, including:

  • Compliance with domestic laws
  • Norms governing anti-corruption and anti-bribery
  • 100% adherence to tax rules
  • Required disclosures
Failure to comply can void treaty protections entirely. For UAE-based investors, maintaining updated filings and securing a Tax residency certificate in UAE strengthens both defensibility and eligibility.

Dispute Resolution Has Become Procedurally Strict

Access to arbitration now requires:

  • Trying local remedies for up to three years
  • Serving a notice of dispute
  • Completing six months of amicable settlement efforts
  • Issuing a notice of intent 90 days prior
  • Waiving local remedies before arbitration
  • Filing within strict timeframes
Also, there is no third-party funding, no parallel claims, and no punitive damages. Investors must prepare dispute strategies early. This implies that waiting too long involves the risks of losing arbitration rights.

Corporate Tax Advisory in the UAE Services

The 2024 UAE-India BIT marks the beginning of a new era where protection is integrated directly into compliance, documentation, and real economic activity. Investors must now demonstrate:

  • Legally structured investments
  • Authentic business presence
  • Full regulatory and tax compliance
  • Timely response to disputes

For investors expanding into India or the UAE, the treaty demonstrates the importance of professional tax, regulatory, and structuring support, particularly for long-term investments.

The IMC Group offers comprehensive corporate tax advisory in UAE to help investors build defensible frameworks from the very outset. Organizations must consult the professionals for guidance on restructuring investments or ensuring compliance under the new treaty.

Author Bio:
Akansha

Akansha Agarwal is a Company Secretary with deep experience across corporate laws, compliance, FEMA, RBI regulations, due diligence, and company secretarial work. She focuses on aligning regulatory requirements with business needs and helps firms build clear, well-structured compliance processes. Her work brings clarity to complex legal requirements and supports smooth operational planning. Akansha advises companies on adapting to changing rules and maintaining disciplined documentation and governance as they grow.

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