Model BIT To Be Sent To Cabinet Soon: Economic Affairs Secy Anuradha Thakur

New Delhi: Economic affairs secretary Anuradha Thakur on Friday said that the Union finance ministry is reviewing its Model Bilateral Investment Treaty to make it investor-friendly and will approach the Cabinet for approval soon. “We need to keep in mind that one of the key aspects in the treaty is the investor disputes that the country is facing,” he said at an event.

A bilateral investment treaty is an agreement between two countries to promote and protect investments made by their investors in the other's territory. It provides foreign investors certain guarantees, and when disputes arise, the agreement typically allows investors to take the host country to international arbitration.

“The BIT is under review, and we are looking at. Many other clauses based on our experience in the negotiations and based on global practices. It is a work in progress. Consultations are underway, and we are reviewing the Model BIT (Bilateral Investment Treaty),” she said, adding that the Model BIT will soon be placed before the Cabinet for a decision.

The secretary also said that trade negotiations and investment negotiations differ in an important way. “Under investment protection treaties, investors can take a sovereign government to arbitration. In contrast, trade treaties have a state-to-state dispute settlement mechanism, where diplomatic relations and negotiations allow for greater flexibility and give-and-take,” she said.

Keeping this in mind, she also said, investor protection has become even more important, especially now that outward direct investment (ODI) from India is increasing. “In every negotiation, we have to ensure that our own investors and companies also receive adequate protection. This is an entirely new dimension in our negotiations. As Indian companies expand overseas, they will need protection in the countries where they invest. Therefore, some of these clauses may actually be useful to retain,” she added.

Asked if overreach of investigative agencies is a reason for flight of capital, Thakur said that gross foreign direct investment reached a record while net FDI declined slightly last year. However, she dismissed fears that the decline in net FDI is due to overreach of law enforcement agencies, including the ED, saying most of such actions are procedure-driven and transparent.