The Centre is in the final stages of overhauling India's decade-old model bilateral investment treaty (BIT), with the revised framework likely to be placed before the Union Cabinet soon, according to Department of Economic Affairs (DEA) Secretary Anuradha Thakur. Speaking at the National Council of Applied Economic Research's India Policy Forum in New Delhi, Thakur noted that the government was looking at the existing clause on dispute settlement, in addition to a wider set of provisions in the model BIT. "The BIT is under review, and we are looking at...many other clauses based on our experience in the negotiations and based on global practices...it is a work in progress. Consultations are underway, and we are reviewing the Model BIT (Bilateral Investment Treaty)", she said. The model "will probably be up for cabinet decision soon," Thakur highlighted, noting that the review is "work in progress; consultations are on."
The revamp comes after several countries — from Saudi Arabia to the UK and other European nations — have expressed concern over India's BIT, which is seen to be too restrictive. As per The Times of India, very few countries have accepted the revised treaty as the finance ministry was holding out on amending it, despite a push from other government agencies. A revamped model BIT was put in place in 2015 after setbacks during arbitration with companies. The current review addresses these international concerns while maintaining India's sovereign safeguards, potentially paving the way for the conclusion of pending BIT negotiations with key partners such as the UK and the European Union.
The revamp aims to make India's investment treaty regime more investor-friendly while balancing sovereign safeguards, potentially paving the way for the conclusion of pending BIT negotiations with key partners such as the UK and the European Union. India's current BIT framework, introduced a decade ago, requires foreign investors to exhaust local legal remedies for up to five years before seeking international arbitration. Government officials have previously hinted that the timeline may be eased under the revamped model. Under the recent BITs signed with the United Arab Emirates and Israel, India has settled on a period of three years instead of five for foreign investors to exhaust domestic judicial remedies before seeking arbitration under what is known as investor-state dispute settlement (ISDS). As per The Hindu BusinessLine, Thakur explained that "We are looking at what are red flags and we have a negative list. We will set that aside and see what is the maximum we can put out there."
The updated BIT model is expected to help India conclude its ongoing BIT negotiations with developed economies such as the United Kingdom (UK) and the European Union (EU), which also recently concluded free trade agreements with India. Thakur said the review was also likely to aid Indian firms that have emerged as major overseas investors. "Our own investors and our companies will also need protection," she said, suggesting a rethink of the government's approach. The updated framework is part of broader efforts to attract foreign capital while supporting domestic industrial growth. Indian industry bodies have been lobbying for faster dispute resolution for investors and easier working conditions for foreign firms to help the country compete for global capital.
India's foreign investment attractiveness has lagged behind regional peers in recent years, highlighting the urgency of BIT reforms. India received $7.7 billion in net foreign direct investment in the year ended March 2026, compared to $20.2 billion for Vietnam and $24.2 billion for Indonesia in 2024. This performance gap underscores the need for more investor-friendly treaty frameworks to compete effectively for global capital. In the last couple of years, India secured bilateral investment treaties with Israel and the United Arab Emirates, while talks with other nations continue. The review comes as India negotiates new bilateral investment pacts with developed nations such as the United Kingdom, where progress towards an agreement has been slow in part due to some provisions in the nation's treaty framework.
