BIPA

A BIPA is a treaty between India and another country. The full name is Bilateral Investment Promotion and Protection Agreement. It protects investors of each country who invest in the other.

Say a Category III AIF sponsor is choosing where to set up an offshore pooling vehicle. A strong BIPA with India is one of the things that sponsor looks for. So is tax neutrality, and a good tax treaty.

The workbook lists what a BIPA gives an offshore investor coming into India: fair and equitable treatment, protection against expropriation, capital repatriation, an efficient dispute resolution framework, and other rights and reliefs. Offshore funds are typically formed in countries that have such an agreement with India — Singapore is the workbook's own example of a jurisdiction chosen partly for its BIPA with India.

A BIPA is distinct from, and complementary to, a Double Taxation Avoidance Agreement (DTAA). A DTAA is about the tax treatment of income and gains; a BIPA is about the broader treatment of the investment itself — protecting against the state taking the asset without compensation, and ensuring the investor can get its capital back out of India.

A fund sponsor comparing two possible domiciles for an offshore pooling vehicle — one with a strong BIPA and DTAA network with India, one without — chooses the former specifically because of the repatriation protection it offers.

Suppose the offshore vehicle invests Rs 300 crore into an Indian Category III AIF. If India were, hypothetically, to impose new capital controls restricting outward remittances, an investor routed through a jurisdiction with a robust BIPA has a treaty-based right to argue for capital repatriation and, if that fails, recourse to the agreement's dispute resolution framework — protections that an investor routed through a jurisdiction with no BIPA with India would not have.

The choice of Singapore as a hub for Indian-focused offshore funds, which the workbook specifically calls out, reflects exactly this combination: a workable DTAA for tax purposes and a BIPA for investment protection, sitting side by side.

Chapter 4, section 4.1.1, introduces BIPA in the same paragraph as tax neutrality and offshore fund domicile choices, naming the specific protections — fair treatment, protection against expropriation, capital repatriation, dispute resolution — that the agreement confers. Expect BIPA tested as one factor (alongside DTAA) in jurisdiction selection for an offshore fund, and possibly matched against Singapore as the workbook's own named example.

• BIPA protects the investment; DTAA relieves the tax on it. They solve different problems and a fund sponsor typically wants both in the chosen jurisdiction.
• BIPA is about the relationship between India and the investor's home country, not a feature of the AIF Regulations themselves — it operates at the level of international treaty law, above and outside SEBI's rules.
• Do not assume every offshore-fund-friendly jurisdiction automatically has a BIPA with India — the workbook frames it as one of the criteria sponsors screen for, not a universal feature.