Talks on a bilateral investment treaty (BIT) between India and the US will not start immediately despite US President Barack Obama strongly pitching for it during his recent visit.
New Delhi has told Washington that it would first finalise its model text for bilateral investment promotion and protection agreement (BIPA), which has not yet been cleared by the Union Cabinet, before beginning consultations on a BIT, an official from the Department of Industrial Policy & Promotion (DIPP) told BusinessLine .
After the text is finalised, India will compare it with the US model text to see what the scope of a bilateral treaty could be before launching talks.
“We made it clear to the visiting US officials that they will have to wait. First we have to be sure ourselves about what we want out of such agreements before we start the talks,” the official said.
Officials add that India is likely to maintain the stand it took during earlier discussions with the US on important issues such as sticking to post-establishment national treatment for investors and keeping intellectual property, government procurement, state subsidies, environment and financial stability out of the agreement. “All this will not go down well with Washington which has been insisting on pre-establishment national treatment and a wider ambit for the BIT to cover as many areas as possible,” the official said.
The draft text for BIPA also reportedly excludes the most favoured nation clause, tax issues, portfolio investments and derivatives from the purview of bilateral investment pacts.
“India has learnt a lesson from the number of legal wrangles it has got into with various foreign companies in the recent past. The new model text will try to ensure that these get reduced to a minimum in the future,” the official added.
New Delhi launched a review of its investment treaties in 2012 following arbitration notices from a number of foreign companies such as Vodafone, Sistema and White Industries, Australia based on such pacts.
It now wants to review all its existing investment pacts based on the new model treaty and also use it for future negotiations.