India reviews investment treaty framework to strengthen foreign investment appeal

Friday 07 August 2026 - 12:15

By: Sahili Aya

India reviews investment treaty framework to strengthen foreign investment appeal

India is reassessing its model Bilateral Investment Treaty (BIT) as part of a broader strategy to make the country more attractive to international investors while supporting ongoing negotiations with key economic partners.

Senior government officials confirmed that the review is underway and that proposed revisions will be submitted to the federal cabinet, reflecting New Delhi's effort to modernize its investment framework amid intensifying global competition for capital.

Treaty overhaul under consideration

The review focuses on updating the standard treaty model that serves as the basis for India's investment agreements with foreign governments.

Officials indicated that policymakers are examining existing provisions to identify clauses that may discourage investment while determining which safeguards should remain in place to protect national interests.

Consultations between government departments and stakeholders are continuing before a final proposal is presented to the cabinet.

Negotiations with key partners

The policy review coincides with India's efforts to conclude new investment agreements with several developed economies, including the United Kingdom.

Progress in some negotiations has been slowed by provisions contained in India's current treaty model, particularly rules governing the resolution of disputes between foreign investors and the Indian government.

Revising the framework could help facilitate future agreements while improving India's attractiveness as a destination for long-term investment.

Investor concerns under review

One of the most closely watched elements of the existing framework is the requirement introduced in the 2016 model treaty that obliges foreign investors to pursue domestic legal remedies for up to five years before initiating international arbitration.

Business organizations have argued that the provision creates uncertainty for investors and have called for more efficient dispute resolution mechanisms alongside measures to simplify the operating environment for foreign companies.

The government is now evaluating how to balance investor protection with national regulatory priorities.

Supporting India's growth ambitions

The treaty review forms part of India's broader economic agenda to attract greater foreign direct investment, strengthen international trade partnerships and reinforce its position as a leading manufacturing and investment destination.

A revised investment treaty model could improve confidence among multinational companies while providing additional momentum to negotiations with strategic partners seeking stronger investment protections.

The outcome of the review will be closely monitored by global investors, as it may shape the next generation of India's bilateral investment agreements and influence future capital inflows into one of the world's fastest-growing major economies.