Modi government negotiating bilateral investment treaties with over dozen countries
What's the story
India is in active negotiations for bilateral investment treaties (BITs) with more than a dozen countries, including Saudi Arabia and Russia. These treaties are aimed at protecting and promoting investments between the nations. The government hopes to finalize deals with some of these countries within the next three to six months, a senior official told PTI.
Treaty details
BITs under negotiation with these countries
The BITs under negotiation are with Saudi Arabia, Qatar, Oman, Israel, the European Union (EU), Switzerland, Russia, and Australia. Talks are also ongoing with Tajikistan, Cambodia, Uruguay, the Maldives, and Kuwait. These treaties serve as a mechanism for protecting and promoting investments in each other's countries. The move comes as India nears its goal of becoming the world's third-largest economy and a global manufacturing hub.
Treaty revamp
Revamping model a bit
The Indian government is also working on revamping its model Bilateral Investment Treaty to make it more investor-friendly and attract foreign players. This was announced in the last Budget. Unlike investment promotion or facilitation chapters in recently concluded free trade agreements, the investment protection element under a BIT offers wide-ranging obligations and commitments to foreign investors.
Legal provisions
India's BITs include mandatory exhaustion of local legal remedies
India's BITs also include a provision of mandatory exhaustion of local legal remedies for five years before international arbitration can be sought. This is beneficial for both the investor and the state involved in a dispute. Recently, India reduced the local remedy period to three years under the India-UAE BIT 2024.
Negotiation strategy
Negotiating treaties that protect its economic interests
India is committed to negotiating treaties that protect its economic interests while ensuring investor confidence and domestic policy space. The country is also working toward rebuilding its BIT network to pre-2015 levels with renewed terms and consistent negotiations with a wide range of partners. This is part of an ambitious effort to balance interests between investors and host states while adhering to international standards of protection.
Economic potential
BITs will allow India to create customized partnerships
Rumki Majumdar, an economist at Deloitte India, stressed the importance of BITs as strategic economic enablers. She said these pacts will give India a unique edge by allowing it to create customized partnerships based on mutual strengths. Unlike multilateral frameworks that require compromises to suit a broad group of nations, bilateral treaties allow case-by-case negotiation reflecting specific economic complementarities between countries.