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Informist, Friday, Sept. 25, 2026

--Fin min source: Model bilateral investment treaty may soon get Cabinet nod

--Fin min source: Tax not to form part of model bilateral investment treaty 

NEW DELHI – The new bilateral investment treaty framework is ready and is soon expected to get Cabinet nod, a senior finance ministry official said. The revamped model of bilateral investment treaty will streamline India's trade negotiation procedures and ensure investor protection, the official said.

The current framework – 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.

The official said there are few red lines, which the government is not willing to cross while designing the new treaty framework. "No tax related provisions will be part of the framework as we are not willing to give up on the sovereign right on taxation," the official said. Similarly local legal provisions will also not form part of it as the government intends to keep judiciary out of the purview of bilateral investment treaty.

The treaty provides a framework between two countries to promote and protect investments made by their investors in each other's territory. It provides foreign investors certain guarantees, while the agreement allows investors to take the host country to international arbitration if any dispute arises. In the last few years, India has signed bilateral investment treaties with Israel, Uzbekistan, and the United Arab Emirates. In total, India has signed nearly 90 bilateral investment treaties.

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

India is currently negotiating bilateral investment treaty with four-five countries including Russia, Canada and the UK, the official added.  End

Reported by Sagar Sen

Edited by Akul Nishant Akhoury

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