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, Department of Economic Affairs (DEA) Secretary Anuradha Thakur said on Thursday. The revamp, first announced in the Union Budget 2025-26, 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.
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 it. Not just this clause, but many other clauses based on our experience in the negotiations and based on global practices,” she said.
“We are also looking at what are really the important red flags for us. Set that aside and on the rest, what is the maximum that we can put out there. It is work in progress; consultations are on,” she highlighted, noting that the model “will probably be up for cabinet decision soon.”
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).
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 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.
Besides attracting foreign capital, Thakur delineated three other priorities — deepening capital mobilisation, driving industrial dynamism and promoting innovation — to sustain India’s economic momentum at a time when “black swan events have become the new normal.”
She flagged that private enterprises accounted for just 41 per cent of India’s gross research and development spending, against 75-79 per cent in advanced economies. Indian industry must utilise this headroom, the policymaker said.
Thakur acknowledged that private investment was now moving steadily upwards, with stalled projects at a decade low. The government has ramped up its own capital expenditure to induce a multiplier effect in the economy in the aftermath of the Covid-19 pandemic. The Centre has nearly tripled its capital spending in the past five years.
She also said there had been a revival in public-private partnerships, which had faded after 2012 amid India’s twin balance-sheet crisis.
“Sitting in DEA and in discussion with NITI Aayog, we find that there is some amount of excitement in the PPP space again,” she said, with large and mid-sized firms keen to partner with states, aided by new instruments such as infrastructure investment trusts (InvITs) and real estate investment trusts (REITs).
Sixteenth Finance Commission Chairman Arvind Panagariya, who also addressed the event, argued that the next wave of reforms lay mostly with the states, particularly on urban land. “Urbanisation was the most critical next step,” he said, noting that India’s urban share had risen to only about 35 per cent of the population. “I do not know of a country that became rich without becoming substantially urban,” he said.
Panagariya called urban land scarce and “extremely expensive”, pointing to restrictive floor-space rules, difficult acquisition and idle public land. He urged states to liberalise building norms, ease zoning and bring unused land to market, or carve out “special employment regions” with single-window powers over land and labour.
