Model bilateral treaty draws global concern, India open to renegotiation

NEW DELHI: As the European Union voices concerns over the new model bilateral investment treaty circulated by India, sources say that the government “is open to

NEW DELHI: As the European Union voices concerns over the new model bilateral investment treaty circulated by India, sources say that the government “is open to renegotiating and addressing the issues flagged by them.”

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“India will definitely work towards addressing the concerns that any partner country has. We have a 12 month window which gives chance to all the countries to understand the dynamics under the new model treaty, so that we can come at a common ground,” sources told HT

Earlier this year India wrote to over a dozen of its partner countries in the EU sharing the intent to renegotiate the bilateral treaties that will protect it from foreign litigation. India aims to conclude these renegotiations by April 2017.

India’s bilateral treaties with EU-member countries have expired or will terminate in the coming years.

Once the new treaties kick in, it will be tough for foreign investors to legally challenge the government decisions.

HT has learnt that India has received a letter from the European trade commissioner Cecilia Malmstrom, which says that such re-negotiations could “have serious consequences” creating “a gap in investment protection and consequently discourage EU enterprises from further investing in India.”

It further says that some investors “may perceive the investment climate as deteriorating,” while some may be unable to secure financing without treaty protections in place.

“Such an outcome would run contrary to the efforts of attracting more investment to India,” the letter said. “I truly hope that India will not opt for such a radical policy shift with regard to investment from the EU.”

The EU has also asked India to negotiate with it and not with its 28 members individually, which India has accepted.

The new model bilateral investment treaty circulated by India, is based on the global model adopted by most of the nations in 2015.

With the new treaty, currently under circulation, India aims to migrate from the 2003 model to the 2015 one along with some changes that suit the country.

India may have surprised its investment partners in seeking to revise business relationships, but it is not the first to do so - and it is not alone.

Since 2012, according to UNCTAD, at least 60 countries have begun revising investment agreements, including South Africa, Brazil and Indonesia - all large, developing economies like India.

(With inputs from