The IBC Amendment Bill (2025) was recently passed in Parliament. Apart from effecting improvements in the code and introduction of alternate resolution mechanisms, it authorises the government to frame rules for cross-border insolvency, a subject that has been a long-standing demand and recommendations of scholars and committees (such as the Insolvency Law Committee).

The recent Select Committee, while reviewing the Bill, had recommended the inclusion of cross-border provisions within the code itself and not as subordinate legislation. While detailed rules are awaited, the enabling section in the Bill was expanded to list the basic tenets of the cross-border framework (recognition, relief, judicial cooperation, assistance, and coordination), among others.

Positive ramifications

The introduction of cross-border insolvency norms has significant positive ramifications. The World Bank Business-ready (B-ready) parameters include cross-border insolvency in their criteria to gauge sound insolvency regimes from the ease of doing business perspective (India is formally to be included in the 2026 B-ready report).

The World Bank not only recognises a jurisdiction’s ability to recognise foreign judgments but also assesses nations in terms of their rules/regulations to deal with cross-border insolvency cases (involving debtors with creditors/assets across geographies).

Apart from improving the insolvency ecosystem from the B-ready perspective, the introduction of cross-border insolvency has direct ramifications on international trade. Recognising its importance, the UN Commission for International Trade Law (UNCITRAL) introduced the model cross-border insolvency law way back in 1997.

Tardy progress

However, its implementation has been slow, with only 62 states (across 65 jurisdictions) adopting it (the most recent being Malaysia). Further, with the Model Law being more of a guidance in nature, many countries have effected modifications to it (for instance, including reciprocity and public policy exceptions) while adopting it in their local context.

A discussion paper by the author at RIS on the subject (‘Insolvency Laws and International Trade: A Perspective’, DP #298, 2024) highlighted how insolvency laws and trade interact. Integrating the economic, law and finance, and institutional rationales, it argued that sound insolvency regimes positively impact international trade through domestic and external channels.

The benefits

By facilitating efficient rehabilitation of viable entities, liquidation of unviable ones, and improving credit markets/access, among others, they improve the health of firms and the economy, thereby having a positive domestic effect. Through the external channels, they provide enhanced legal certainty for trading and multinational enterprises to deal with cross-border insolvency situations.

As such, the recent IBC amendment Bill has strengthened India’s international trade potential through both channels. By improving code timelines, governance and providing much-needed clarifications on several judicial interpretations, the Bill seeks to intrinsically strengthen the domestic insolvency system in terms of effectiveness and efficiency. By introducing enabling legislation to deal with cross-border cases, it strengthens the institutional channel and provides much required legal certainty.

Trade headwinds

However, International trade in recent times has been facing significant headwinds due to the decline of multilateralism. adhoc imposition of tariffs by the US, imposition of Carbon Border Adjustment Mechanism by the EU and policy uncertainties. The situation has been further exacerbated by the Middle East situation and rising global tensions.

As a result, many nations from the Global South have been aggressively pursuing bilateral trade/investment agreements while pressing for reforms of multilateral institutions, including Bretton Woods institutions and the WTO (which have for long been at a standstill).

Considering the many challenges faced, while efforts may continue on multilateral institution reforms, the thrust must also remain on improving intrinsic factors important to international trade, of which institutions are an integral part (WTO, 2013). While there is no uniform definition of institutions, it is well recognised that insolvency laws are a form of institutions which govern and shape the behaviour of economic actors (increased focus on which can translate into real outcomes). However, so far, trade and insolvency are often viewed separately and have yet to be ingrained in regional cooperation forums.

Economic cooperation

Such issues may also need greater integration in the economic cooperation agendas of intergovernmental forums as well.

For instance, India has recently assumed the BRICS presidency (also referred to as BRICS+ with its expanded membership of 11 countries) under the core pillars of resilience, innovation, cooperation and sustainability. A recent UN Conference for Trade and Development (UNCTAD) report has highlighted that tremendous potential exists for scaling up intra-BRICS trade (which currently accounts for only 20 per cent of South-South trade).

However, it is also recognised that only a few BRICS+ countries have adopted the UNCITRAL model law, which includes Brazil, South Africa (passed but not effectively operational), Saudi Arabia and the UAE (specifically the Dubai and Abu Dhabi financial centres). Therefore, opportunities for cooperation exist in the sharing of experiences, strengthening institutions, and addressing cross-border insolvency.

As such, India’s focus on strengthening factors influencing trade is a positive step in the right direction. In times of heightened uncertainty and external factors beyond control, looking inwards and strengthening the internal ecosystem is vital for the Global South.

This would include, amongst others, improving institutions (including insolvency laws) while integrating them in regional and intergovernmental cooperation agendas. Sound institutions like insolvency laws are important for international trade, either at the multilateral, regional, or bilateral level. Sustained focus and initiatives in this context can strengthen resilience, boost economic cooperation, and facilitate trade expansion.

The writer is a Visiting Fellow at the Research and Information System for Developing Countries (RIS), New Delhi. Views expressed are personal

Published on April 20, 2026