India is set to review its model bilateral investment treaty after years of criticism from trading partners over restrictive terms, with the government considering reforms to encourage foreign investment and address arbitration concerns.
India is moving to revisit its model bilateral investment treaty after years of complaints from trading partners that its terms are too restrictive, according to comments from economic affairs secretary Anuradha Thakur at an NCAER conference in New Delhi.
Thakur said the treaty was “under review” and that consultations were continuing on changes to reflect India’s experience in negotiations and broader global practice. She said the cabinet would soon decide on the revisions and suggested officials were weighing which provisions should be retained, and which should be set aside.
The review matters because India’s current model treaty, adopted in 2015 after a series of arbitration setbacks, has deterred some potential partners. Saudi Arabia, the UK and several European countries have all raised concerns about the framework, which requires foreign investors to pursue domestic legal remedies for five years before seeking international arbitration. That approach has been seen by critics as a barrier to dispute resolution and, by extension, to fresh investment.
Thakur defended the need for a cautious balance, saying investment treaties differ from trade agreements because they allow private investors to take sovereign governments to arbitration. She added that India must also consider the protection of its own companies as outbound investment rises, noting that clauses once viewed as defensive may now be useful to Indian firms expanding overseas.
The rethink comes as India’s foreign investment numbers remain a mix of record gross inflows and weaker net gains. Official data cited by The Times of India and The Indian Express show gross FDI reached about $94.5 billion in 2025-26, while net FDI improved to roughly $7.7 billion from under $1 billion a year earlier. Reserve Bank of India data reported by Business Standard also showed net inflows strengthening, even as repatriation and outward investment continued to weigh on the headline figure.
Analysts at Freshfields said India appears to be entering a new phase in its treaty policy after terminating around 75 bilateral investment treaties in 2016 and 2017. They said a revised model is now under consideration, although no draft has been published, leaving the final shape of India’s approach uncertain.
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