Union Finance Minister Nirmala Sitharaman presents the Interim Budget 2024 within the Lok Sabha, at Parliament House in New Delhi on Feb. 1, 2024.
| Photo Credit: PTI
India is negotiating bilateral investment treaties with different countries with a view to promote foreign inflows, Finance Minister Nirmala Sitharaman mentioned on February 1. She mentioned that foreign direct investment (FDI) has doubled throughout 2014-23 to $596 billion in contrast to the influx obtained throughout 2005-14.
“For encouraging sustained foreign investment, we are negotiating bilateral investment treaties with our foreign partners, in the spirit of ‘first develop India’,” she mentioned whereas presenting the interim Budget 2024-25.
India is negotiating bilateral treaties with countries, such because the UK. These investment treaties assist in selling and defending investments in one another’s countries. These pacts are vital as India has earlier misplaced two worldwide arbitration instances in opposition to British telecom big Vodafone and Cairn Energy plc of the UK over the retrospective levy of taxes.
Align treaties with world practices
Commenting on bilateral investment treaties, financial assume tank GTRI (Global Trade Research Initiative) mentioned that India wants to align its treaties with world investment practices, handle the unfavourable notion attributable to the mass treaty cancellations and replicate on its negotiation abilities. New agreements ought to ideally resolve these issues, it mentioned in an announcement.
GTRI mentioned that India has cancelled 77 of its over 80 bilateral investment treaties (BIT) by 2016, as they did not align with its pursuits. “Now, it is renegotiating with 37 countries using the restrictive 2016 Model BIT, which may lead to protracted negotiations due to its narrow ‘investment’ definition, vague terms, omission of principles like ‘fair and equitable treatment’, and Most-Favoured Nation status,” GTRI co-founder Ajay Srivastava mentioned. He added that the mannequin BIT additionally calls for buyers search native options for at the least 5 years earlier than arbitration, making new BITs difficult for different countries.
Foreign direct investment (FDI) fairness inflows in India declined 24 per cent to USD 20.48 billion in April-September 2023, in accordance to authorities information. The complete FDI — which incorporates fairness inflows, reinvested earnings and different capital — contracted 15.5 per cent to USD 32.9 billion in the course of the interval beneath overview in opposition to USD 38.94 billion in April-June 2022.
The high investor countries embody Singapore, Mauritius, the US, the UK, and the UAE. Computer software program and {hardware}, buying and selling, providers, telecommunication, vehicle, pharma and chemical compounds are among the key sectors that entice FDI into India.
An official had earlier mentioned that hardening rates of interest globally and worsening geopolitical scenario impacted FDI inflows into India in 2022-23.
