India Reforms Investment Treaties
India is actively re-evaluating its bilateral investment treaty (BIT) model with the aim of making the country a more attractive destination for foreign capital. Economic Affairs Secretary Anuradha Thakur confirmed this initiative on Friday, indicating that a formal proposal could soon be presented to the Cabinet.
The move comes amidst a global economic landscape marked by uncertainty, prompting a concerted effort by the Indian government to boost foreign direct investment (FDI) and strengthen private sector involvement alongside ongoing public capital expenditure.
Streamlining Dispute Resolution
A key aspect of the review involves assessing and potentially modifying existing provisions that have been identified as potential deterrents for international investors. Thakur stated, "We are looking at what the red flags are, and we have a negative list. We will set that aside, and see what is the maximum we can put out there."
Among the changes under consideration is a possible relaxation of the five-year mandatory period, stipulated in the 2016 treaty template, which requires foreign investors to exhaust all domestic legal remedies before pursuing international arbitration for dispute settlement. This particular timeline has been a frequent point of contention and a demand from several foreign partners.
Attracting Global Capital Amid Turmoil
During an event organized by the National Council of Applied Economic Research in New Delhi, Secretary Thakur emphasized India's commitment to growth and stability in an era of global volatility. She highlighted that contemporary capital flows are not solely driven by high returns but also by a desire for stability, predictability, and strategic resilience.
Thakur underscored the importance of a robust macroeconomic and public finance framework in achieving these goals. She also stressed the need for a cohesive national strategy that integrates macroeconomic policy, capital formation, and industrial development to propel India's next phase of economic expansion.
Rising Private Investment and Public Capex
The Economic Affairs Secretary also pointed to encouraging signs in the domestic investment landscape. She cited data indicating a steady increase in private investments, attributing this partly to the stimulative effect of increased public capital expenditure in recent years. Project execution has notably accelerated, with project stalling rates at their lowest in a decade.
According to CMIE data, private sector project announcements averaged nearly ₹34.8 lakh crore between 2024 and 2026, constituting 71% of all new investment announcements. The Centre's capital expenditure has seen a significant surge, growing more than fivefold since FY15 to reach ₹10.7 lakh crore in FY26, with a budget of ₹12 lakh crore for the current fiscal year. Thakur also highlighted the need for greater private sector investment in research and development, noting its current share is 41% compared to 75-79% in some advanced economies.