The European Union (EU) has urged India to extend by at least six months the Bilateral Investment Treaties (BITs) it has with the member countries, in order to sustain the steady flow of investments from that region into the country.
“It will be helpful if the BITs can be extended for six months. This has become a particular problem within the FTA (Free Trade Agreement) talks … But we want India to first give us the extension. We are meeting the Commerce Minister (Nirmala Sitharaman) and this will be one of the elements that we intend to take up,” said Geoffrey Van Orden, Chair of The European Parliament Delegation for relations with India here on Monday.
Van Orden is leading a delegation of European Parliamentarians, who are on a five-day visit to India. Besides Sitharaman, the delegation will be meeting Finance Minister Arun Jailtey, Minister of State for External Affairs V. K. Singh, and the Minister of Power, Coal and Mines, Piyush Goyal.
EU has been taking up the matter with India over the past several months as it intends to negotiate a single BIT with India instead of separate ones with each of the member countries. However, India has said it will not be in a position to do do.
At present, India has 83 BITs that were inked since 1994, of which 57 countries, including EU nations, were sent termination reminders. According to Sitharaman, these countries were given a period of one year to renegotiate the new BITs but since they did not do so, the government will have to let them lapse. In other words, fresh investments coming from the European nations will not have legal protection.
But EU has said it was not feasible for these countries to negotiate the BITs because according to the present policy, only the European Commission will be negotiating the BIT on behalf of the 23 member countries.
“Many foreign investors of EU are now asking for guarantees. A number of European companies who are looking at India to invest are now seeking some kind of assurance,” said the EU Ambassador to India Tomasz Kozlowski.
The first BIT to lapse was the one between India and Netherlands, the rest will expire in March, April and May.
Last month, the Commerce Minister categorically stated that India will not give extensions and all old BITs will be cancelled by March 31.
A need was felt to revise all the BITs as India was being dragged to courts by a number of international firms. According to UNCTAD, India was sued the maximum number of times. As a result, in December 2015, the Cabinet approved a new model of BIT based on which countries were asked to renegotiate.
FTA talks to resume?
Meanwhile, the EU has said there is now a “will” to move forward in the negotiations for a free trade agreement (FTA), or Bilateral Trade and Investment Agreement (BTIA) as it is officially called, with India.
However, according to Van Orden, there are several technical problems that continue to be stumbling blocks in resuming the talks, apart from the BIT issue.
India and EU have been negotiating the FTA since 2007.