Union Budget 2025: Nirmala flips BIT coin to catch global investors

After holding firm for several years, the finance ministry has finally announced its intent to revamp the model bilateral investment treaty (BIT) to make it "more investor-friendly", addressing a key ask of countries - from the UK to Australia.

The decision will also pave the way for free trade agreements with the European Union and the UK, which have been demanding greater certainty about investment protection. Investment treaties help protect and promote investments in each other's countries.

With tax disputes such as those with Vodafone and Cairn, govt had amended the model BIT in 2016, but it was not signed by most partners, as they saw it as a "going-back-in-time" move.

All this, while the ministry has been arguing that sovereign decisions, especially of the legislature, cannot be subject to disputes in arbitration tribunals.

Govt's intent will also provide comfort for investments through windows such as the India-UK Infrastructure Bridge, or discussions with Saudi Arabia to set up two petroleum refineries and petrochemical complexes in Gujarat and Andhra Pradesh.

While certain concessions have been offered to UAE under the comprehensive economic agreement, it is unclear how the new model BIT will be designed.

The govt's move comes along with a push to attract greater investment and exports, for which several steps have been announced, including easier avenues of finance for exporters.

Apart from support for labour-intensive sectors such as textiles and leather, finance minister Nirmala Sitharaman on Saturday also announced an export promotion mission.


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