Economic Affairs Secretary Says Model BIT Nearing Cabinet Approval With New FDI Focus
Economic Affairs Secretary says model BIT to reach Cabinet soon.
The government’s revised Model Bilateral Investment Treaty will soon be submitted to the Union Cabinet for approval, Economic Affairs Secretary Anuradha Thakur said on Friday. The ongoing review is considering not only protections for foreign investors entering India but also safeguards for Indian companies making direct investments in other countries.
Thakur said the growth of overseas direct investment by Indian businesses had introduced an “entirely new dimension” into the country’s investment-treaty negotiations. As Indian companies expand their international operations, the government must ensure that they receive adequate legal protection in foreign jurisdictions, alongside maintaining appropriate safeguards for India’s regulatory interests.
A Model Bilateral Investment Treaty serves as a reference framework when India negotiates investment agreements with other countries. Such treaties typically establish the principles governing the treatment and protection of investments made by companies and individuals from each participating nation. The model’s provisions can therefore influence future negotiations without automatically constituting an agreement with another country.
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Thakur indicated that some clauses under review may remain useful because they could protect Indian investors operating abroad. The government is examining the model at a time when India’s role has evolved from being primarily a recipient of foreign capital to also becoming an important source of overseas investment through domestic companies expanding internationally.
Discussing investment entering India, Thakur said gross foreign direct investment inflows had increased but remained insufficient for a country of India’s size and development requirements. She added that the government was continuing policy-level engagement aimed at attracting more capital. The statement acknowledged progress in inflows while highlighting the need for further improvement.
The Economic Affairs Secretary also rejected claims that foreign investors were reluctant to enter India because of concerns about possible action by law-enforcement agencies such as the Enforcement Directorate. The revised model treaty’s details will become clearer after Cabinet consideration. Its final provisions will be significant in determining how India balances investor protection, regulatory authority and the interests of domestic companies operating overseas.
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