Non-European Union states keen on investment agreements with India

Coinciding with the termination of investment treaties, the Indian government developed a model agreement after studying global good practices

Introduction

Several non-European Union (EU) states are keen on finalising bilateral investment treaties with India to boost the potential for investments and to address concerns of investors on matters such as dispute resolution, people familiar with the matter said.

These efforts have got a boost following the signing last month of the Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association (EFTA), which comprises Iceland, Liechtenstein, Norway and Switzerland.

Investment Protection Agreement

The 27-member EU is negotiating an investment protection agreement with India, alongside a free trade agreement (FTA). However, non-EU states, which are among some 68 countries whose bilateral investment treaties were terminated by the Indian government in recent years, are also keen to finalise such pacts, the people said.

This includes members of EFTA such as Switzerland, which believe new investment treaties will help the four members of the bloc to deliver on the commitment to promote investments worth $100 billion into India over the next 15 years, the people added. While the EFTA members jointly signed the FTA, they will have to negotiate separate investment pacts with India.

Concerns of Investors

“Investors are seen to be holding back in the absence of investment treaties and insurance premiums have gone up. There are also concerns about the lack of adequate mechanisms to settle disputes,” one of the people said.

There is also a feeling among investors that the resolution of disputes under the Indian system takes too long, the people said.

Model Agreement

Coinciding with the termination of investment treaties, the Indian government developed a model agreement after studying global good practices, factoring in the nation’s interests and considering the need to protect investments of foreign entrepreneurs, two officials from two different ministries said requesting anonymity.

While the model agreement provides broad guidelines, it also gives flexibility to Indian negotiators, depending on reciprocity, the officials said.

“Negotiators are, however, expected to follow the spirit of the December 2015 cabinet decision on this matter,” one of them said, referring to a cabinet meeting chaired by Prime Minister Narendra Modi that approved a revised Model Text for International Investment Agreements, including independently signed bilateral investment agreements and investment chapters in any FTA.

Attractive Features of the Model Agreement

The first official said the model agreement of 2015 has several attractive features, such as an enterprise-based definition of investment, non-discriminatory treatment through due process, protections against expropriation, an Investor State Dispute Settlement (ISDS) provision requiring investors to exhaust local remedies before starting international arbitration, and limiting the power of a tribunal to award monetary compensation alone.

However, several countries have sought modifications in provisions of the model text, especially those related to dispute settlement, the people said.

The 2015 model also excludes sensitive areas such as government procurement, taxation, subsidies, compulsory licences and matters related to national security, the second official said. “While India welcomes FDI, it cannot sacrifice its national interest for foreign investments,” he said.

“The 1993 Model BIT text, with some amendments made in 2003, had provisions that were vulnerable to broad and ambiguous interpretations by arbitral tribunals,” the second official added.

SDGs, Targets, and Indicators Analysis

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth
• SDG 16: Peace, Justice, and Strong Institutions

The article discusses the termination of investment treaties by the Indian government and the interest of non-European Union states in finalizing bilateral investment agreements with India. This is related to SDG 8, which aims to promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. It also relates to SDG 16, which aims to promote peaceful and inclusive societies for sustainable development, provide access to justice for all, and build effective, accountable, and inclusive institutions at all levels.

2. What specific targets under those SDGs can be identified based on the article’s content?

• Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation.
• Target 16.3: Promote the rule of law at the national and international levels and ensure equal access to justice for all.

The article highlights the need for investment agreements to boost potential investments and address concerns of investors, which aligns with Target 8.2 of SDG 8. It also mentions concerns about dispute resolution mechanisms and the resolution of disputes taking too long, which relates to Target 16.3 of SDG 16.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator for Target 8.2: Gross domestic product (GDP) per capita, productivity, and employment rates.
• Indicator for Target 16.3: Number of countries with a functioning and independent national human rights institution.

The article does not explicitly mention specific indicators. However, progress towards Target 8.2 can be measured using indicators such as GDP per capita, productivity levels, and employment rates. Progress towards Target 16.3 can be measured by the number of countries that have established functioning and independent national human rights institutions.

Table: SDGs, Targets, and Indicators

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Source: hindustantimes.com

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