Centre Sets New Investment Treaty Framework to Boost Foreign Funds

The Ministry of Finance has completed its review of the model Bilateral Investment Treaty and sent the updated framework to the Cabinet Secretariat for approval. A senior government official stated that India expects to finalise four to five new investment pacts soon under this revised model, including an agreement with Canada. This follows the recent Canada-India Finance Ministers' Economic and Financial Dialogue attended by Finance Minister Nirmala Sitharaman, where India expressed readiness to start treaty talks. The Union Budget previously announced the need to update the 2016 model to make it more investor-friendly and draw steady foreign money. While the older framework required investors to try local legal remedies for five years before seeking international arbitration, the new rules are expected to absorb changes seen in recent deals, such as a three-year local remedy period agreed with the United Arab Emirates. However, the government maintained that local courts must not be ignored and that tax matters will stay entirely outside the treaty framework as a sovereign right. These new rules arrive as net foreign direct investment inflows stand at 12 billion dollars in the first six months, up from previous years but still lower than past peaks.