Government Plans to Revise Investment Treaty to Attract Global Companies
NEW DELHI: The Indian government plans to amend its model bilateral investment treaty (BIT) to reduce the waiting period for foreign investors seeking international arbitration from five years to one year after exhausting local remedies. This change aims to address longstanding concerns from overseas investors and comes amid a rise in challenges faced by global investors. A cabinet note has been submitted by the finance ministry to facilitate this amendment.
The proposed changes also include expanding the definition of investment from enterprise-based to asset-based, which would encompass shares and equity instruments held for five years or more. Sources indicate that the government is considering specific carveouts related to subsidies, local government measures, and compulsory licensing during public health emergencies. The investor-state dispute settlement (ISDS) framework may serve as a foundation for the upcoming BIT negotiations.
BITs are international agreements that establish the terms and conditions for private investment between two countries. They provide for national treatment and a dispute resolution mechanism. India’s first model BIT was introduced in 1993 to attract foreign direct investment. However, following a surge in ISDS claims and a notable loss in a case involving Australian firm White Industries in 2015, the government opted to revise the model treaty to better safeguard its interests. This led to the unilateral termination of many BITs, which has been met with resistance from various stakeholders.
Since 2018, only six countries have entered into BITs with India, including Belarus, Kyrgyzstan, Brazil, UAE, Uzbekistan, and Israel. Recent trade agreements with EFTA nations, Oman, the UK, and the India-Brazil BIT have focused solely on state-to-state obligations, excluding investor-state arbitration. Exceptions exist, such as the India-UAE BIT, which allows for three years of exhausting local remedies, and the agreement with Israel, which stipulates a four-year period. Economic affairs secretary Anuradha Thakur recently confirmed that the government will seek cabinet approval for the changes to the model BIT while ensuring adequate protection for Indian investors.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
