India and the US have decided to speed up the talks for the long-pending Bilateral Investment Treaty (BIT).

The US is pushing India to wrap up the talks either by August, when the second round of annual Strategic and Commercial Dialogue (S&CD) takes place, or latest by November when the next round of Trade Policy Forum (TPF) happens. This year both the S&CD TPF will be held in New Delhi.

Both sides are planning to ramp up the talks that have been stuck several times ever since the negotiations commenced in 2009.

However, in 2015 when the Modi government released a model BIT text replacing the old 2003 model, the US had been upbeat about concluding the talks before the Obama government demits office.

The conclusion of the BIT formed the main agenda of the talks when Prime Minister Modi met US President Barack Obama on June 7 in Washington. Both leaders vowed to expedite the talks, despite “several gaps” emerging from the negotiations, sources told BusinessLine .

But interestingly, there was no mention of the BIT in the joint statement due to the talks hitting a roadblock, sources said.

The US is hopeful that talks might reach a “meaningful closure” with the visit of US Secretary of State John Kerry and US Commerce Secretary Penny Pritzker in August for the S&CD and US Trade Representative (USTR) Michael Froman, sources added.

This is because in its endeavour to achieve a “high-standard” BIT, the US has been nudging India to look at the investment chapters of the Free Trade Agreements (FTA) it has with Japan and Korea.

However, India has recently told the US authorities that the FTAs with Japan and Korea were signed before the new BIT model was finalised and it will not be possible to negotiate the BIT based on those FTAs. “The Japan and Korea investment pacts were signed before the new BIT was finalised. We are only negotiating based on the new text now. The US has to reconsider its position as this is the only model text of BIT that India is now negotiating on,” said a senior Finance Ministry official.

India has also indicated that there is no room for compromise in the negotiations.

US investments During Modi’s visit to the US, Amazon chief Jeff Bezos had vowed to invest $3 billion in India. Besides, American companies that are members of the US-India Business Council (USIBC) have also pledged investments worth $45 billion into India.

However, sources indicated that all these investments may never become reality unless the BIT with US is signed as the American investors are seeking safeguards and protection on their investments.

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