India will not extend the March 31 deadline for other countries to renegotiate their investment agreements and align them to a new investment framework, commerce and industry minister Nirmala Sitharaman said on Tuesday.
Further, investments from countries that fail to renegotiate investment protection agreement by April 1will not get complete benefit under any treaty
With only three months left for India’s Bilateral Investment Treaty (BIT) to come into force, not many countries have approached the government to renegotiate their existing investment pacts based on the model BIT text.
With only three months left for India’s Bilateral Investment Treaty (BIT) to come into force, not many countries have approached the government to renegotiate their existing investment pacts based on the model BIT text.
“We had given one year’s time for countries with whom we have investment agreements to come and renegotiate them… We are waiting for them to come and talk,” the minister said
There will be a hiatus between the expiry of old pacts and the inking of new ones during which investors will not get the same level of treaty protection.
The European Commission (EC) has raised concerns over negotiations for a fresh BIT.
However, India cannot individually negotiate the new agreement with countries in the European Union (EU) with whom it is also negotiating a Bilateral Trade and Investment Agreement (BTIA).
However, India cannot individually negotiate the new agreement with countries in the European Union (EU) with whom it is also negotiating a Bilateral Trade and Investment Agreement (BTIA).
It is up to the EU and its members to come to India and decide…Irrespective of the trade negotiations, the investment agreement will come into force,” Sitharaman said.
The government came out with the revised model text for BIT in 2015 and all existing investment protection agreements will be null and void from March 31.
The revised model BIT will be used for renegotiation of existing BITs and negotiation of future BITs and investment chapters in various free trade pacts. The model excludes matters such as government procurement, taxation, subsidies, compulsory licences and national security to preserve the regulatory authority for the government.
It has a provision that international investors have to first exhaust the option of local judicial system at least for five years before going to international arbitration mechanism as against the extant pacts that contain arbitration clauses which give a private investor the right to initiate legal proceedings against a foreign country, if it has breached investment protection standards.
India has received several dispute notices from investors on the BITs signed on the basis of old model text of 1993 under which it had inked treaties with 83 countries.
Due to this provision, Devas Multimedia won an arbitration case against India when the government cancelled a contract given to the company after discovering irregularities. Cairn Energy Plc and Cairn UK Holdings Ltd have initiated international arbitration under the India-UK Bilateral Investment Protection and Promotion Agreement (BIPA), wherein it has sought $5.6 billion in compensation from India.
Last year, the Union Cabinet approved the first BIT in accordance with the new framework between India and Cambodia to boost investment.
WTO ISSUES Ahead of a key meeting during the World Economic Forum in Davos in a week’s time, India on Tuesday stated that ways for easier trade in services and the ongoing Doha Round issues would be high up on its priority for negotiations at the World Trade Organization (WTO) as it prepares for the ministerial meeting in Argentina later this year
Even as Sitharaman reiterated India’s stand on food security issues, she stated that new issues such as e-commerce and government procurement would be included in the WTO's agenda only after all countries reach a consensus.
The Economic Times New Delhi,11th January 2017
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