NEW DELHI: India is close to concluding four bilateral investment treaties (BITs), each based on an updated BIT framework, a Ministry of Finance official has said. New Delhi has been in talks with the UK, the European Union (EU), Oman, and Qatar on BITs, and recently initiated negotiations with Canada.
The draft of the updated BIT framework is with the Union Cabinet and is expected to be approved very soon, the official said.
Meanwhile, Union Commerce Minister Piyush Goyal on Friday said India and Australia were working towards a BIT.
The flurry of BIT negotiations and the conclusion of the model framework review come at a time when India has recorded a slump in foreign direct investment (FDI) inflows amid persistent external shocks. Net FDI inflows have declined over the past four years, from an annual average of $40 billion between FY20 and FY22 to $6.95 billion in FY26.
In in her Budget speech for FY26, Union Finance Minister Nirmala Sitharaman had announced a review of India’s BIT framework. To encourage sustained foreign investment, the current model BIT will be revamped and made more investor-friendly, she had said.
India’s current BIT framework was rolled out in 2015, following which the government undertook the unilateral cancellation of BITs with over 50 partners in 2016.
Most BIT partners raised concerns that the 2016 framework resisted renegotiating treaties with India under it. The requirement to exhaust local legal remedies for five years before initiating international arbitration made it difficult to conclude a broad set of new investment treaties. The clause is likely to remain under the updated BIT model as well, the official said. Department of Economic Affairs Secretary Anuradha Thakur had last month said the Centre was reviewing the dispute settlement clause along with other provisions under the updated model.
Sources have previously indicated that India may ease the five-year timeline for exhausting local legal remedies under the new framework.
The issue of dispute settlement has also come into focus with Malaysian infrastructure company Dhaya Maju Infrastructure (Asia) Sdn Berhad issuing a claim notice of over ~1,200 crore under the India-Malaysia BIT over alleged judicial delays in India.
Dhaya Maju had set up an Indian special purpose vehicle (SPV), Jabalpur Corridor (India) Pvt Ltd, for a road project in Madhya Pradesh. Following termination of the concession agreement by Madhya Pradesh Road Development Corporation, an arbitral award was passed in favour of the SPV in August 2014. Dhaya Maju has claimed that, 12 years after the award, its SPV has received only about 50 per cent of the awarded amount.
The India-Malaysia BIT was among the treaties terminated by India in the 2016 mass cancellation. However, since the arbitral award in favour of Dhaya Maju’s Indian SPV was passed in August 2014, when the treaty was still in force, the company has proceeded with its claim under the treaty.
An email sent to the Union Ministry of Finance seeking its response to the claim notice did not elicit an immediate response.
Ajay Srivastava, founder of New Delhi-based Global Trade Research Initiative, said: “As India aims to become the third-largest economy, it needs to align its treaties with global investment practices, address the negative perception caused by the mass treaty cancellations and reflect on its negotiation skills. The new framework should ideally resolve these concerns.”
Besides updating the BIT model, New Delhi is also easing FDI norms to attract investment. Recently, the government eased FDI norms for inventory-based e-commerce firms. In May, India also eased FDI norms under Press Note 2 of 2026, allowing investment without government approval from entities having non-controlling land-bordering country ownership of up to 10 per cent.
Source; Business Standard
