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The Union Cabinet on Wednesday approved the model text for the country’s new Bilateral Investment Treaty (BIT) hoping to provide more stability to foreign investors as well as keep the country out of disputes with multinational companies.
Accordingly, the model BIT excludes matters such as government procurement, taxation, subsidies, compulsory licenses and national security to preserve the regulatory authority for the Government.
In the past, a number of multi-national companies including Cairn Energy, Nokia and Vodafone have taken India for arbitration over tax claims while many telecom firms also sent notices to the government for breach of bilateral pacts after their 2G licences were taken away following a Supreme Court ruling.
“The essential features of the model BIT include an ‘enterprise’ based definition of investment, non-discriminatory treatment through due process, national treatment, protections against expropriation, a refined Investor State Dispute Settlement (ISDS) provision requiring investors to exhaust local remedies before commencing international arbitration, and limiting the power of the tribunal to awarding monetary compensation alone,” said an official release after the meeting.
The first pact under the new model is likely to be signed with the United States. India has signed 83 bilateral trade and promotion agreements, of which 72 are in force.
Meanwhile, the Union Cabinet gave ex-post facto approval to official amendments in the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 that was introduced in the Lok Sabha.
It also approved a Memorandum of Understanding between India and BRICS (Brazil, Russia, India, China and South Africa) counterparts for strengthening and developing of energy saving and energy efficiency cooperation.
The meeting chaired by Prime Minister Narendra Modi also cleared a pact for cooperation between India and Spain on port and maritime matters.
The Cabinet also approved sale of plot measuring 0.99 acres belonging to Air India in Coimbatore for ₹19.81 crore.
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