India's Union Cabinet has greenlit a new model Bilateral Investment Treaty (BIT) that cuts the period for international arbitration from five years to one year, a change that will be rolled out alongside trade agreements with Australia and Canada.
The draft, forwarded by the finance ministry on Friday, replaces the 2015 model that many countries rejected. Under the new framework, India will retain sovereign rights over taxation and domestic courts, and no tax‑related provisions will be included.
The revised BIT follows a pattern of India letting only a handful of countries sign on – six since 2018 – and it marks a shift towards a more balanced approach. It also signals India's intent to engage partners such as the UK, the EU, and the European Free Trade Association in similar agreements.
Commerce Minister Piyush Goyal said the treaty will complement a free‑trade agreement under negotiation with Australia, aiming to elevate economic cooperation. He added that the deal would be "balanced, fair and equitable".
The cabinet is set to approve the treaty in the coming weeks, after which India will launch negotiations with Canada and the UK under the new model, a move that could accelerate investment flows.