India to exclude taxation from bilateral investment treaty framework

India plans to exclude taxation from the scope of bilateral investment treaties, with a revised model BIT set for Cabinet consideration soon. The Finance Ministry has circulated a note outlining the new approach, which seeks to protect India's tax sovereignty while managing investment relationships.

Under the framework, foreign investors will be required to exhaust local remedies before pursuing international arbitration. The government is currently negotiating with four to five countries on the matter, signalling a shift in how India structures its investment protection agreements.