India to push for bespoke BITs, won't make use of templates
In the February budget, the government had said the current model bilateral investment treaty (BIT) will be revamped and made more investor friendly to encourage sustained foreign investment besides ensuring the spirit of "first develop India."
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NEW DELHI: India is likely to pursue country specific, bilaterally negotiated investment pacts instead of using a templated model text, a top government official told ET, marking a significant shift in approach amid the upheaval wrought by Donald Trump 's tariff threats.In the February budget, the government had said the current model bilateral investment treaty (BIT) will be revamped and made more investor friendly to encourage sustained foreign investment besides ensuring the spirit of "first develop India.""It would be a bilateral negotiations-based approach now," said the official cited above.The change comes amid a growing view that the emphasis should be on bilateral pacts in view of the tariff moves by the US President and concerns over the relevance of multilateral institutions.However, what will stay are the exclusion of tax-related issues and provisions to exhaust local legal remedies in tax disputes for a specified period before arbitration is sought. A bilateral negotiation-based approach will help reach consensus quicker.India is close to finalising an investment pact with the United Kingdom after a free trade agreement with the nation.Discussions are also ongoing with the European Union (EU) on an investment protection agreement apart from a free trade deal. New Delhi is also close to finalising a bilateral trade agreement with the US.Provisions in investment pacts are closely watched by global investors.India is keen to become part of global supply chains and is eyeing trade alliances with developed countries. It wants investment pacts to strike a balance between safeguarding foreign investment and the national interest.India has prohibited third-party funding of disputes in the investment agreement with the United Arab Emirates (UAE) and is likely to insist on such a provision in all accords going forward.The wording of treaties came under scrutiny after India lost international arbitration disputes under them to Cairn Energy Plc, Vodafone Group BV and Devas Mauritius Ltd.India subsequently amended the text of the model investment treaty in 2015 to explicitly exclude taxation measures as well as compulsory licences for drugs.By 2016, India had cancelled over 70 of more than 80 bilateral investment treaties.Only seven countries have accepted the new model text treaty. The new 2015 text was opposed by several European countries and attempts to revise pacts based on it has made little headway.
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