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Informist, Friday, Aug. 7, 2026

 

--Econ secy: Cabinet to soon clear model bilateral investment treaty 

--Econ secy: Model bilateral investment treaty under review 

 

NEW DELHI – The Union Cabinet will soon clear the revamped model bilateral investment treaty to streamline India's trade negotiation procedures and ensure investor protection, Economic Affairs Secretary Anuradha Thakur said Friday. The model bilateral investment treaty is under review, and the government is looking at many clauses in the existing model based on India's experience in trade negotiations and global practices, Thakur said at the National Council of Applied Economic Research's India Policy Forum 2026 event.

 

Finance Minister Nirmala Sitharaman had proposed revamping the existing model in the Budget for 2025-26 (Apr-Mar). "To encourage sustained foreign investment and in the spirit of 'first develop India', the current model BIT (bilateral investment treaty) will be revamped and made more investor-friendly," she had said in her Budget speech. 

 

A bilateral investment treaty is an agreement between two countries to promote and protect investments made by their investors in the other's territory. It provides foreign investors certain guarantees, and when disputes arise, the agreement typically allows investors to take the host country to international arbitration.

 

The existing model – Model BIT 2016 – requires a foreign investor to wait for five years before initiating a treaty-based arbitration against India. This means that if a foreign investor has a dispute with India, it should first pursue domestic remedies for five years before bringing a claim under the agreement. In the last few years, there has been growing opposition to this five-year period, with many seeking to lower it. Recently, economist Surjit Bhalla, who was also the former executive director for India at the International Monetary Fund, said that a five-year waiting period is "unprecedented in history."

 

According to Thakur, the possible backdrop to fixing the five-year period "was the large number of disputes which were going on, including many important and large disputes." Perhaps five years was given because of the way local remedies at the time took to resolve the issue, she said. "It is work in progress; consultations are on," she said. 

 

The government will also have to bear in mind the investor disputes that the country is facing. Under investment protection treaties, an investor can take the sovereign to arbitration. This is unlike the trade treaties, where there is a state-to-state mechanism, Thakur said. "So, every negotiation we also have to bear in mind that our own investors and our companies will also need protection," she said. "Some of these clauses might actually be useful to keep. So, with all of that, the model is under review, and it will probably be up for Cabinet decisions."

 

In the last couple of years, India has signed bilateral investment treaties with Israel, Uzbekistan, and the United Arab Emirates. In total, India has nearly 90 bilateral investment treaties.  End

 

Reported by Sagar Sen and Priyasmita Dutta

Edited by Saji George Titus

 

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