New model bilateral investment treaty to be attuned to demands of global investment environment: CEA

Chief Economic Adviser V Anantha Nageswaran discusses revamping India's bilateral investment treaty model to attract foreign investment while protecting sovereignty.

Chief Economic Adviser V Anantha Nageswaran on Tuesday (March 4, 2025) said the new model text for bilateral investment treaty (BIT) will be better aligned to the demands of a dynamic global investment environment, while safeguarding India's sovereign rights and regulatory space.

Addressing a post Budget webinar 2025 on the theme of 'Making India Investment Friendly', he said the BIT framework is being revised to reflect modern challenges.

Almost 10 years have passed since the last review of India's model BIT and since then, the global investment ecosystem and international jurisprudence have evolved significantly, he said.

Nageswaran said investors now seek stronger protection for their investments, especially in emerging economies, and this has necessitated an update of the model BIT to align it with international norms, while ensuring that the country remains an attractive investment destination, especially for medium enterprises.

"The new model BIT therefore will be more attuned to the demands of a dynamic global investment environment. At the same time, we will reflect India's sovereign rights and the importance of regulatory space so that public policy priorities are not constrained by international legal obligations," Nageswaran said.

Finance Minister Nirmala Sitharaman in her 2025-26 Budget speech said that to encourage sustained foreign investment and in the spirit of 'first develop India', the current model BIT will be revamped and made more investor-friendly.

The announcement assumes significance as only a few countries have accepted the existing model tax treaty, and most of the developed nations have expressed their reservations on the tax with regard to provisions like resolution of disputes.