Economic Affairs Secretary Anuradha Thakur announced that the revised Model Bilateral Investment Treaty (BIT) will soon move to the Cabinet, introducing a crucial new focus on protecting Indian companies' overseas investments.

Key Takeaways

  • The revised Model Bilateral Investment Treaty (BIT) will soon be sent to the Cabinet for approval.
  • A new strategic dimension involves protecting the Overseas Direct Investment (ODI) of Indian companies.
  • Secretary Anuradha Thakur dismissed fears that enforcement agencies like the ED are deterring foreign investment.
  • India's gross FDI inflows reached a record $95 billion in 2025-26.

Speaking at the India Policy Forum in New Delhi, Economic Affairs Secretary Anuradha Thakur revealed that the government is in the final stages of reviewing the model Bilateral Investment Treaty (BIT). A significant shift in this review is the inclusion of protections for Indian companies' outward investments, a move described as an "entirely new dimension" in India's treaty negotiations.

As Indian private sector entities expand their global footprint, the government aims to ensure that their assets and interests are shielded under international law. Thakur noted that as Overseas Direct Investment (ODI) flows out, negotiating clauses that protect Indian investors becomes just as critical as those attracting foreign capital.

Why This Matters

BozokMedia analysis shows that India is navigating a complex transition in its capital account. While gross FDI inflows have hit record highs, the net FDI has faced volatility due to massive repatriation by foreign investors and a surge in Indian companies investing abroad. For instance, Indian outward investment rose from $11 billion in 2020-21 to an estimated $34 billion in 2025-26. The new BIT framework is designed to provide the legal certainty required for this dual-flow economy.

"The rise in outward investment is a sign of the maturity of the Indian private sector, transitioning from domestic players to global entities."

Furthermore, Thakur addressed concerns regarding the impact of law enforcement agencies on investor sentiment. She rejected the notion that agencies like the Enforcement Directorate (ED) are causing investor hesitation, asserting that agencies are becoming more procedure-driven and transparent, focusing only on severe offenses.

Historical Context

Bilateral Investment Treaties (BITs) serve as the bedrock of international investment law, providing protection against expropriation and ensuring fair treatment. The 2015 model BIT introduced a mandatory five-year period for domestic legal remedies before international arbitration could be sought. This clause has been a point of contention for foreign investors, and the current review aims to find a more balanced approach.

Did You Know?: India's gross FDI inflows surged from $82 billion in 2020-21 to a massive $95 billion in the 2025-26 fiscal year.

Frequently Asked Questions

1. What is the significance of the 'local remedies' clause?
It requires investors to attempt to resolve disputes in domestic courts for a set period before moving to international arbitration.

2. Why is protecting Indian ODI important?
As Indian companies become global players, they face risks abroad that require international treaty protections similar to those offered to foreign investors.