Government Aims to Overhaul Investment Treaty After Years of Inactivity
NEW DELHI: The Indian government is reviewing its model bilateral investment treaty (BIT) after years of discussions. Economic Affairs Secretary Anuradha Thakur announced that consultations are underway to amend the treaty, which has been criticized for being overly restrictive. The cabinet is expected to make decisions on proposed changes soon.
Thakur emphasized the need to address “red flags” and indicated that a negative list will be set aside to explore maximum potential for investment. Several countries, including Saudi Arabia and the UK, have raised concerns about India’s BIT, which has deterred foreign investment. The current model, revised in 2015, requires foreign investors to exhaust domestic legal remedies for five years before seeking international arbitration.
Thakur pointed out the importance of investor protection, especially as Indian companies increase their outward direct investments. She noted that while trade treaties allow for state-to-state dispute resolution, investment protection treaties enable investors to take sovereign governments to arbitration. As Indian firms expand globally, ensuring adequate protection in foreign markets has become a critical aspect of negotiations.
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