India is close to concluding bilateral investment treaties (BITs) with the United Kingdom, the European Union, Oman and Qatar, according to government officials, as the country moves to finalise a revamped, more investor-friendly BIT framework. The draft of the updated treaty model is awaiting Union Cabinet approval, which a Finance Ministry official said is “expected very soon.”
Finance Minister Nirmala Sitharaman announced the review of India’s BIT framework in her FY26 Budget speech, with the explicit goal of making the treaty model more attractive to foreign investors. The current framework dates back to 2015, after which India controversially terminated more than 50 existing BITs in 2016 when partner countries resisted renegotiating under the older, more restrictive model. India is separately in early-stage discussions on investment pacts with Canada and Australia.
What Changes Under India’s Revised BIT Framework?
The Department of Economic Affairs is reviewing the dispute-settlement clauses that made the 2015 model unpopular with investors, particularly the requirement to exhaust local legal remedies for up to five years before seeking international arbitration. DEA Secretary Anuradha Thakur confirmed the dispute-resolution provisions are under review, though officials indicate the local-remedies requirement is likely to remain in some form even under the updated model. Notably, taxation will continue to be excluded from BIT coverage, since, as one government source put it, “Parliament has the sovereign right to decide taxation policy.”
What Do Trade Experts and Officials Say?
Ajay Srivastava of the Global Trade Research Initiative (GTRI) said India must “align its treaties with global investment practices” to remain competitive for foreign capital. Commerce and Industry Minister Piyush Goyal has said India and Australia are “working towards a BIT” as part of a broader push to widen India’s investment-treaty network. Officials argue that a modernised framework balancing investor protection with the government’s right to regulate is essential to attracting the scale of foreign direct investment India needs to sustain its growth targets.
Market and Trade Reaction
Foreign investors and legal advisory firms have generally welcomed the prospect of a more predictable, investor-friendly BIT regime, which could reduce the perceived legal risk of investing in India relative to peer emerging markets. Conclusion of BITs with the EU and UK in particular would complement the recently implemented India-UK Comprehensive Economic and Trade Agreement (CETA) and ongoing India-EU free trade negotiations, giving investors both trade and investment-protection cover in key Western markets. Gulf investors from Oman and Qatar, both significant sources of sovereign wealth fund capital, are seen as likely to increase allocations to Indian infrastructure and manufacturing assets once treaty protections are in place.
What Happens Next?
The Union Cabinet is expected to approve the revised BIT framework in the coming weeks, after which formal treaty texts with the UK, EU, Oman and Qatar can be finalised and signed. Negotiators will need to resolve outstanding questions on the scope of the local-remedies requirement and investor-state dispute settlement mechanisms before treaties are ready for signature. Markets will watch for a Cabinet decision as the next concrete milestone.
Frequently Asked Questions
Which countries is India finalising BITs with?
India is in advanced negotiations for bilateral investment treaties with the United Kingdom, the European Union, Oman and Qatar, with early-stage talks also underway with Canada and Australia.
Why did India revise its BIT framework?
India’s 2015 BIT model was seen as too restrictive by investors, prompting the government to terminate over 50 treaties in 2016. The revised framework, flagged in the FY26 Budget, aims to be more investor-friendly while preserving India’s right to regulate.
Will taxation be covered under the new BITs?
No. Officials have confirmed taxation will remain excluded from BIT coverage, since Parliament retains sovereign authority over tax policy.
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