The federal government is aiming to finalise new bilateral investment treaties (BITs) with the European Union (EU), Saudi Arabia, Switzerland, Oman and the Maldives within the subsequent two to 3 months, providing enhanced flexibility to international buyers together with a shorter timeline to exhaust home cures earlier than initiating worldwide arbitration.
Concurrently, the Cupboard will think about the proposed BIT 4.0 regime, which revises the mannequin textual content for a greater steadiness between sovereign pursuits and international funding in addition to creates a versatile framework for future negotiations. A versatile mannequin would enable India to tailor provisions based mostly on the companion nation’s strategic significance and funding ties, sources mentioned.
FE reported lately that the domestic-remedy timeframe might be diminished to 2 years, relying on bilateral negotiations. Just lately, India diminished the timeframe from 5 years to 3 years for investments from the United Arab Emirates and Israel.
“We aren’t providing 5 years to anybody any extra. The negotiations are beginning with three years,” an official mentioned, referring to the departure from the 2015 Mannequin BIT.
The five-year requirement was launched within the 2015 framework largely in response to the investor-state tax disputes India confronted on the time, however the Centre is now overhauling the restrictive framework to draw international funding amid weakening capital inflows since 2023.
Nevertheless, as underneath the 2015 Mannequin BIT, taxation disputes will stay exterior the purview of the funding treaties. The federal government is now figuring out solely the important purple traces and offering larger flexibility elsewhere.
The overhaul goes past dispute decision and revises a number of different provisions, drawing on classes from current agreements. Funding treaties with the UAE and Israel, for instance, depart from the 2015 mannequin, extending safety to portfolio investments in shares, bonds and different monetary property, which had been excluded underneath the sooner framework.
Attracting FDI is a prime precedence for the federal government because the nation’s burgeoning infrastructure sector wants large-scale non-public funding. Gross FDI inflows rose 17.3% to $94.5 billion in FY26 from $80.6 billion a yr in the past. Nevertheless, internet FDI inflows stood at $7.7 billion in FY26 from round $1 billion the earlier yr.
The restrictive 2015 BIT mannequin was adopted after a sequence of high-profile arbitration disputes, together with these involving Vodafone and Cairn, which challenged India’s retrospective tax calls for by way of worldwide arbitration. These instances prompted the Centre to terminate most of its older BITs. The more durable 2015 framework, nevertheless, discovered few takers.
