Archive · 7 Aug 2026
India to send model BIT to Cabinet, protect overseas investors
Countries sometimes make special agreements called investment treaties to protect businesses that invest money in each other's countries.
India has been reviewing its model of such an agreement and will soon send it to the Cabinet, the group of top ministers, for approval.
For a long time, the agreement focused on protecting foreign companies investing in India.
Now, Indian companies are investing a lot of money in other countries too, so the government wants to protect them as well.
This is a brand new part of the negotiations.
In recent years, the amount of money coming into India compared to money going out has dropped sharply.
That happened because foreign investors took a lot of money out and Indian companies invested more abroad.
The fall in net investment has also weakened India's currency.
Some people think foreign investors are scared to invest in India because of fears about law enforcement agencies, but the Economic Affairs Secretary says that is not the reason.
She says investors look for returns and stability, which India offers.
The new agreement will decide what protections both sides get.
Economic Affairs Secretary Anuradha Thakur said the revised model Bilateral Investment Treaty (BIT) will be sent to the Cabinet for approval soon.
Protecting Indian companies' rising foreign direct investment (FDI) abroad is an "entirely new dimension" in the government's BIT negotiations.
The government is reviewing the 2015 model BIT clause that requires foreign investors to exhaust domestic legal remedies for five years before seeking international arbitration.
India's net FDI fell from about $44 billion in 2020-21 to under $1 billion in 2024-25, recovering to $7 billion in 2025-26.
Thakur rejected claims that fear of law enforcement agencies deters foreign investors, saying capital seeks returns and stability.
- Who
- Economic Affairs Secretary Anuradha Thakur and the Indian government
- What
- Announced that the revised model Bilateral Investment Treaty, now including protection for Indian companies' overseas investment, will be sent to the Cabinet for approval
- When
- Friday, at the National Council of Applied Economic Research's India Policy Forum
- Where
- New Delhi, India
- Why
- Because Indian companies' overseas direct investment has risen sharply, contributing along with repatriation of past investments to a fall in net FDI, a weaker balance of payments, and a weaker rupee
Critics and foreign investors
Indian government
Fear of enforcement agencies deterring FDI
Critics and foreign investors
Foreign investors are hesitant to invest in India due to fears of potential action by law enforcement agencies such as the Enforcement Directorate.
Indian government
Economic Affairs Secretary Thakur rejects this, saying foreign capital looks for returns and stability, and agencies are becoming more procedure-driven and transparent.
Five-year local remedies clause
Critics and foreign investors
Critics cite the local-remedies clause, which did not exist before the 2015 model BIT, as a hurdle for foreign investors seeking international arbitration.
Indian government
The government is reviewing the clause, but some clauses protecting Indian interests will likely be kept as Indian companies invest more abroad.
Reason for falling net FDI
Critics and foreign investors
Some attribute the decline to investor hesitation and enforcement-related fears in India.
Indian government
Chief Economic Advisor V Anantha Nageswaran blamed the localization of global supply chains, forcing Indian companies to invest overseas to sell in those markets.
- Model BIT status
- Under review, to be sent to Cabinet for approval soon
- Net FDI 2020-21
- About $44 billion
- Net FDI 2024-25
- Less than $1 billion
- Net FDI 2025-26
- $7 billion
- Indian companies' overseas FDI 2025-26
- $34 billion (up from $11 billion in 2020-21)
- Gross FDI 2025-26
- Record $95 billion (up from $82 billion in 2020-21)
- Foreign investor repatriation 2024-25 to 2025-26
- Over $105 billion combined
- 2015 model BIT local remedies window
- Five years before seeking international arbitration