India’s recent ascent to become the world’s fourth-largest economy, surpassing Japan, is a historic milestone that brings us closer to realising our long-term economic aspirations. This achievement arrives at a time when global economic dynamics are rapidly shifting. Rising protectionism and increasing reliance on economic interdependence, especially in areas like FDI and FPI, are now viewed as strategic vulnerabilities. In such an environment, a nation’s ability to sustain consistent growth becomes crucial to its strategic autonomy and international stature.
Among various growth drives, such as infrastructure, innovation, and human capital, private investment remains the most vital for sustainable development. While public spending can provide initial momentum, it is private capital that fuels long-term stability. The Economic Survey 2023–24 underscores this, emphasising the need for robust private investment to bolster India’s economic resilience.
Global experiences offer valuable lessons. Countries such as Vietnam, Malaysia, and Thailand have effectively leveraged the China Plus One strategy, attracting FDI and integrating into global value chains. This success has been acknowledged by NITI Aayog in its “Trade Watch” report. Vietnam’s remarkable transformation since its 1986 Doi Moi reforms stands in contrast to India’s temporally parallel but slower-paced policy reforms, which have lagged in translating FDI inflows into sustained domestic reinvestment. To fully capitalise on global capital, India must foster a business environment that not only attracts investment but also retains and recycles it efficiently.
A key enabler to achieve a healthy and sustained FDI environment is a predictable, efficient dispute resolution mechanism. The World Bank’s now-retired “Ease of Doing Business” rankings, and its successor, the B-READY framework, highlight that legal clarity and swift resolution of commercial disputes are essential for investor confidence. India’s experiences reinforce this: High-profile cases like Vodafone and Vedanta exposed how ambiguity in policy and dispute mechanisms can undermine investor trust.
The 2016 decision to terminate numerous Bilateral Investment Treaties (BITs) and replace them with a seemingly benign but protectionist model, requiring the exhaustion of domestic remedies before accessing international arbitration, introduced additional friction. This, combined with persistent delays in the domestic judicial system, dampened investor sentiment. Supporting this view, a 2022 study by Hartmann and Spruk found that countries terminating BITs experienced a decline in FDI of over 30 per cent compared to those that retained them.
Fortunately, timely and necessary reforms are underway. The Supreme Court’s Mediation and Conciliation Project Committee (MCPC), in collaboration with NALSA, has launched a civil mediation campaign, “The Mediation for Nation” drive, under the leadership of Chief Justice B R Gavai and Justice Surya Kant. Spanning from July to September 2025, the initiative aims to promote the resolution of commercial disputes outside the courts. In such matters, arbitration and mediation are increasingly emerging as effective alternatives to protracted litigation, offering speed, confidentiality, and the preservation of business relationships.
The Indian Council of Arbitration (ICA), India’s apex arbitral institution, has undertaken several initiatives that further advance this agenda. Its recent formalisation of institutional mediation through new rules launched in January 2025 marks a natural extension of its mission. The ICA’s international influence continues to grow. At the London International Disputes Week (June 2025) and the Riyadh conference (February 2025), the ICA brought together global legal and policy leaders to discuss how arbitration can catalyse economic corridors and bolster investor confidence.
India’s judiciary has played a pivotal role in reinforcing this shift. Landmark rulings, such as the Avitel Studioz decision, which narrowed the scope of “public policy” as a ground for resisting foreign awards, and the Tomorrow Sales ruling, which recognised third-party funding in arbitration, have modernised India’s dispute resolution ecosystem and aligned it with international standards.
On the legislative front, reforms are underway. Proposed amendments to the Arbitration and Conciliation Act, 1996 and the Commercial Courts Act, 2015 seek to introduce pre-litigation mediation and streamline interim relief procedures. These reforms aim to make India a more attractive jurisdiction for both domestic and international dispute resolution.
Importantly, there is growing recognition of India’s potential to serve not just its own needs but to emerge as a global hub for arbitration services. With world-class legal minds, a multilingual workforce, competitive costs, and a judiciary that increasingly supports party autonomy and finality of arbitral awards, India is uniquely positioned to host cross-border commercial arbitration. Arbitral Institutions like the ICA, can further help attract global businesses to resolve their disputes on Indian soil, strengthening the country’s legal and economic infrastructure alike.
Yet, challenges persist. India’s courts are burdened with over 52 million pending cases, some stretching back decades. In this context, institutionalised, time-bound alternative dispute resolution (ADR) mechanisms are not merely optional, they are essential. Arbitration, mediation, and conciliation must be viewed as critical infrastructure for economic growth, on par with roads, ports, or digital networks.
Encouragingly, India is rising to meet this challenge. With coordinated judicial support, expanding institutional capacity, and forward-looking policy reforms, we are building a dispute resolution ecosystem commensurate with our economic ambitions. Efficient arbitration is more than a legal remedy; it is a signal to the world that India is open, secure, and prepared for long-term investment. As Hon’ble Justice Surya Kant aptly stated during his keynote address in Sweden, “The future of arbitration is not just international; it is also Indian.” That future is now within our grasp.
The writer is Director General, Indian Council of Arbitration
