India and some other countries have rejected an informal proposal made by the EU and Canada to work towards a multilateral pact on investments at the World Trade Organisation that would have an Investor-State Dispute Settlement (ISDS) mechanism built into it.

"The EU and Canada have got into an investment agreement in which they have got the much contentious ISDS which allows corporates to take sovereign governments to international arbitration. They now want it to be the template for a multilateral agreement. We have rejected it completely," said Commerce & Industry Minister Nirmala Sitharaman at a press briefing on Monday.

The proposal for a global investment pact, made at an informal breakfast meeting of Trade Ministers of select countries in Davos last week, was also rejected by Brazil, Japan and Argentina.

"It is only after all options for settling disputes between a sovereign government and a corporate in domestic courts have been exhausted do we want to allow the issue to be taken up in international courts. It should be part of a bilateral agreement and not a multilateral agreement," Sitharaman said.

The EU, in a bilateral meeting with India, also indicated that it would hold free trade talks with India only after concluding a new bilateral investment treaty with India.

"I went to ask the EU Trade Commissioner when the free trade talks could start. She said that they were keen to get the investment agreement negotiated," she said.

Last year, New Delhi had asked all countries with which India has investment protection agreements, including the EU, to re-negotiate those pacts on the basis of the new draft text of BIT.

EU did not do so and the existing BITs with existing members are set to lapse in April.

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