India’s Union Cabinet approved a two‑year arbitration window in a bilateral investment treaty (BIT) with Saudi Arabia on Thursday, replacing the five‑year exhaustion period that had been standard in the model BIT finalized a year earlier. The change, announced by Finance Minister Nirmala Sitharaman, grants Saudi companies a shorter timeframe to pursue international arbitration after domestic remedies are exhausted.
Saudi Aramco is eyeing two refineries in India, alongside joint ventures with BPCL and ONGC, and the two‑year clause is seen as a key incentive for the Gulf giant. The move signals India’s intent to attract more foreign direct investment in the energy sector, a sector that has lagged behind other high‑growth areas.
Sitharaman told delegates at the Munich Security Conference that negotiations are underway with Canada and Russia on similar BITs, and that by December India hopes to conclude agreements with at least three more countries. She added that a draft template, now approved by the cabinet, will be the basis for future negotiations.
India has previously offered concessions to the UAE and Israel, and the cabinet had initially aimed to reduce the exhaustion period to one year across all BITs. For Saudi Arabia, the compromise settled on a two‑year window, reflecting the strategic importance of the Gulf partner.
The cabinet will formally sign the treaty early next week, after parliamentary approval, and the treaty’s implementation will trigger a review of bilateral investment frameworks with other Gulf and non‑Gulf states.