Government moves to amend model bilateral investment treaty

The Indian government is set to amend its model bilateral investment treaty (BIT) to address long-standing grievances of overseas investors, according to people familiar with the discussions. A cabinet note has been moved by the finance ministry, proposing changes to the treaty that was put in place a decade ago.

The key proposed change is to allow international arbitration one year after an investor exhausts local remedies, replacing the current five-year clause. The government has also proposed expanding the definition of investment from an enterprise-based approach to an asset-based one, which would include shares and equity instruments maintained for five years or more.

Additionally, the government is looking to provide certain carveouts, which may cover aspects such as subsidies and measures taken by local governments. The move follows a spate of challenges by global investors against India under existing BIT provisions.