NEW DELHI India may no longer stick to the model bilateral investment treaties (BITs) it adopted after terminating most of these treaties in 2016, a senior development-conscious official has said.
The shift in focus comes at a time when India is negotiating investment treaties alongside free trade agreements with some major trading partners, including the UK and the EU, seeking greater investment protection while oppose the 2016 model BIT.
“It can’t be the same model as 2016. It’s been a long time since then and a lot of changes have happened in the meantime, so what countries want in BITs has also changed,” the official said, adding that the new model, when and when it is decided, will need the approval of the Cabinet.
Another official had said mint that in cases involving partners with whom India has various ties, including economic and strategic, the ‘one size fits all’ approach of the 2016 model BIT may not be suitable and “there may be adjustments to suit some partners” .
The first official further said that with changes in the geopolitical landscape along with FTAs being renegotiated for better terms with partner countries, the BIT will surely be quite different from the model proposed in 2016.
The government struck down BITs based on old model texts drawn up in 1993 after receiving adverse judgments in multi-million dollar investor-state disputes in international tribunals. To avoid this, the model BIT included “exhaustion of local remedies” as a clause that actually emphasized the rights of the State over the rights of investors.
However, the number of BITs that India signed after 2016 decreased. Economists said it has also affected the pace of foreign direct investment.
mint previously reported that the EU has proposed a system of investment courts to resolve disputes between investors and states.
The UK is also seeking a different mechanism to resolve investment-related disputes than that proposed in the model BIT.
Valdis Dombrovskis, European Commissioner for Trade mint that India’s ambition to become a manufacturing hub and integrate with global value chains requires huge investment and for this investment to happen there also needs to be “adequate investment protection” and an “adequate mechanism to resolve disputes as they arise. .
An Icrier working paper on the impact of BITs on FDI flows in India noted that on many occasions the government has expressed outright antipathy towards any multilateral governance of international investment.
“Instead, faith seems to lie in soliciting foreign investment, backed by indices like a climb in the ease of doing business ranking. However, mere improvement in this type of ranking may not be enough to encourage substantive foreign direct investment.”
According to a World Bank ‘Ease of Doing Business 2020’ report, India ranked 163 out of 190 countries for ease of enforcing contracts, taking 1,445 days and 31% of the claim value to resolve disputes. Experts said the delay hurts investor confidence and affects FDI inflows.
The Icrier report adds: “The collective presence of general investor protection is positively and significantly linked to foreign investment flows.”
Queries sent to the ministries of Commerce and Finance remained unanswered as of press time.
Discover more from PressNewsAgency
Subscribe to get the latest posts sent to your email.