Revised model text for bilateral investment treaty approved

The central government on Wednesday approved the revised model text for the Indian bilateral investment treaty (BIT).

The union cabinet approved the revised model BIT in its meeting held here.

"The revised model BIT will be used for re-negotiation of existing BITs and negotiation of future BITs," the union cabinet said in a statement.

In addition, the revised text will be used in investment chapters of comprehensive economic cooperation agreements (CECAs), comprehensive economic partnership agreements (CEPAs) and free trade agreements (FTAs).

"The new Indian model BIT text will provide appropriate protection to foreign investors in India and Indian investors in the foreign country," the statement said.

The essential features of the revised model BIT includes an "enterprise" based definition of investment and a refined investor state dispute settlement (ISDS) provision.

On the other hand, the model text excludes matters such as government procurement, taxation, subsidies, compulsory licenses and national security to preserve the regulatory authority for the government.

The development assumes significance as a BIT boosts the confidence of investors by assuring a level playing field in all matters, while providing for an independent forum for dispute settlement by arbitration.

Besides, BITs help project India as a preferred foreign direct investment (FDI) destination as well as protect outbound Indian FDI.

India signed the first BIT in 1994, since then, it has entered into similar agreements with 83 other countries. These BITs were largely negotiated on the basis of the Indian model BIT of 1993.