A new model draft of the Bilateral Investment Treaty (BIT) has been sent to the Cabinet and is currently awaiting approval, government sources aware of the matter said. The sources indicated that the Cabinet is likely to approve the new framework soon. It has also been assured that the BIT with Canada will fall under the new framework.
A Finance Ministry official said India is set to conclude four BITs, including one with Canada, with each agreement to be negotiated under the updated BIT framework.
“Four BITs will be finalised soon, and people are already going to different countries for negotiations. We have negotiations with 20-25 countries as per the BIT framework of 2016. But later, during our negotiations with the UAE and Qatar, we moved far away from the previous framework,” the official said.
The new BIT framework will incorporate changes that emerged during negotiations with the UAE and Qatar. However, sources emphasised that the new framework will not include tax concessions, as this could expose India to arbitration, undermine its sovereign policy-making space and also to ensure that the local judiciary is not ignored.
“People may have complained about India’s judiciary from time to time. But it has stood the test of time,” the official said, emphasising that the framework would be designed to ensure that “some red lines will not be crossed”.
Accordingly, the government has categorically ensured the exclusion of tax-related provisions from the model BIT.
“Tax will not go into the model BIT. It’s our sovereign right to tax, and that can’t be open to arbitration,” the sources added.
The updated framework comes at a time when India is aiming to scale up foreign direct investment (FDI) inflows. A BIT is designed to protect foreign investors by providing legal safeguards. Union Finance Minister Nirmala Sitharaman had announced a review of India’s BIT framework in her Budget speech for FY26.
