Absence of BIT may bite Swedish investments to India: Ann Linde

Nayanima Basu Amiti Sen New Delhi | Updated on January 11, 2018

Ann Linde, Swedish Minister of EU Affairs and Trade

IKEA facing labelling issues in India, says Sweden’s Trade Minister

New investments from Sweden to India could see a slowdown as New Delhi has allowed the Bilateral Investment Treaty (BIT) with European Union to lapse, said Swedish Minister of EU Affairs and Trade Ann Linde.

In an interview to BusinessLine, Lindesaid, “India has cancelled all the BITs. The one with Sweden was cancelled just a few months ago. We would have preferred the BIT to continue until we had the BIT with EU. So of course we are not happy about it. But now our companies have to live with it. It could impact new investments coming from Sweden to India.”

Linde, who is in India to attend the 18th session of the India-Sweden Joint Commission for Economic, Industrial and Scientific Cooperation (JCEC) with Minister of State for Commerce and Industry Nirmala Sitharaman, said that Sweden finds it “problematic” that negotiations on a BIT between India and EU have not yet begun.

While last year New Delhi had asked the EU to begin negotiations with it based on the new BIT model that was approved, the EU had dilly-dallied and requested India to extend the BITs with its member countries till the India-EU BIT was in place, but India did not oblige.

“What we think is problematic is that there is no investment negotiations ready with the EU yet and that means that there is no real protection for the companies on their investments. Companies always think twice when they are doing investments and if they see that there is no protection for their investments then they get concerned,” Linde added.

New Delhi, however, argues that the investments already made in India under the older BITs would continue to be protected for the next few years under the sunset clause. Moreover, there is always the law of the land that offers protection to all.

She also batted for the India-EU Free Trade Agreement (FTA) and urged India to expedite the negotiations that started in 2007.

“We really want the FTA with India. The negotiations started 10 years ago and then nothing happened for a very long time. Now efforts have started again and from the EU side we are really eager to get a good FTA with India. I hope the will is stronger from the Indian side,” she said.

Taxation concerns

The Swedish Minister also highlighted some of the concerns raised by Swedish firms concerning India’s taxation regime. She also pointed out the the concerns on labelling and protection of intellectual property. She said Swedish furniture-maker IKEA is facing lot of challenges here concerning labelling.

“IKEA still has issues and one of their biggest issues is labelling because the rules for labelling is not suitable for such companies . It is much too bureaucratic and it is really making it difficult for them to function. They have taken it up with the Indian government,” she said.

IKEA has asked exemption from the requirement of putting the Maximum Retail Price label in its products as it leads to a rise in its operating costs. It has argued that the prices can always be checked online for transparency.

On IPR, Linde said the Swedish firms present in India and also those that are planning to invest India want tightening of IPR rules in favour of innovators. In the JCEC meeting, the two sides discussed expediting work on a memorandum of understanding in order to strengthen the cooperation in the field of IPs.

The Minister also said that Swedish firms are eagerly awaiting the Goods and Services Tax (GST) rollout from July.

Published on May 18, 2017

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