The Indian Express | 28 August 2023
India UK bilateral investment treaty likely to be finalised soon, to differ from 2016 model
by Aanchal Magazine
As India and the UK inch closer towards finalising a free trade agreement, the contours of the much-debated and contentious bilateral investment treaty are likely to be finalised around the same time as the FTA and are expected to vary significantly from the model BIT of 2016, changes for which would require approval of the Cabinet.
“We cannot be closer to the model BIT because that is from 2016 and as it is it has not found many takers. In today’s times, the demands of many countries are far removed from the BIT, so we cannot stick to the model format of the treaty,” a person aware of the matter said, adding that changes to the investment treaty will be sent to the Cabinet for approval.
The investment treaty has been seen as one of the sticky points in the ongoing negotiations of the FTA between the two countries, raising concerns if both the agreements would come through at the same time. A separately revised investment treaty for the UK could set the stage for revision of investment modalities with other countries going ahead. The European Union has already stated that it has proposed an investment court system for dispute resolution and is awaiting India’s response for its proposal for dispute resolution under the bilateral investment protection pact that is being negotiated along with the FTA between the two countries.
Investment treaties are crucial for promotion and protection of investors as they make investments in each other’s countries. At present, the model BIT of India from 2016 mandates exhaustion of domestic remedies prior to initiation of international arbitration proceedings, a measure which is likely to see some tweaks in the upcoming revised version, an official said.
The model BIT was last revised in 2016. The government had received dispute notices from investors on the BITs signed on the basis of the old model text. In order to minimise such investor related disputes in future, the government then revised its model BIT text aimed at providing investor protection within the overall framework of laws and policies regulating foreign investment in India keeping in mind the interests of the nation, which has been viewed as protectionist by some countries.
The changes in erstwhile BIT were also prompted by several international arbitration proceedings by global majors such as Vodafone and Cairn against the Indian government in different tax disputes.
Under the India and UK FTA negotiations, out of the total 26 chapters in the proposed FTA, 19 have been closed. UK Secretary of State for Business and Trade Kemi Badenoch, who was in Jaipur last week for the G20 trade ministerial meeting, met Union Finance Minister Nirmala Sitharaman on Saturday.
Badenoch also had a stock taking meeting in Delhi with India’s Commerce and Industry Minister Piyush Goyal on Saturday to review the ongoing India-UK FTA negotiations. “While expressing satisfactions over the last 12 rounds of negotiations wherein several chapters have been finalised, both exuded confidence on the next round of negotiations to be similarly successful. Both Chief Negotiators apprised the Ministers about the current state of play, issues outstanding for resolution and their continuous joint efforts to iron out the same,” an official statement issued on Sunday said.
Till 2015, India had signed bilateral investment treaties with 83 countries based on the model BIT of 1993, and as amended in 2003. Out of these, 74 were ratified. Among these 74 bilateral investment treaties, notice of termination has been issued to 68 countries with request to re-negotiate based on the model BIT 2015 and six BITs are still in force. After the model BIT of 2015 was approved, India has signed four agreements of which two are in force, as per government data shared in Parliament in March this year.