India is very close to concluding four bilateral investment treaties (BITs), each based on an updated BIT framework, a finance ministry official said. New Delhi has been in talks for BITs with the UK, the European Union (EU), Oman and Qatar, and has also recently initiated negotiations with Canada.
The draft of the updated BIT framework is with the Union Cabinet, the official said, adding that it is expected to be approved very soon.
The review of the BIT has concluded at a time when India is seeing a moderation in foreign direct investment (FDI) inflows amid persistent external shocks. Net FDI inflows into India have declined over the past four years, falling from an annual average of around $40 billion between FY20 and FY22 to $6.95 billion in FY26.
Union Finance Minister Nirmala Sitharaman had announced a review of India’s BIT framework in her Budget speech for FY26. “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,” Sitharaman had said in February last year.
India’s current BIT framework was rolled out in 2015, following which the government undertook unilateral mass cancellation of BITs with over 50 partners in 2016.
Most BIT partners complained that the 2016 framework was restrictive, and they resisted renegotiations 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 local legal remedy clause is likely to remain under the updated BIT model as well, the official said. Sources have previously indicated that India may ease the five-year timeline attached to local legal remedies under the new framework.
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 the BIT model update, 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 (LBC) ownership of up to 10 per cent.
