No easing of deadline for ending old bilateral investment pacts: Sitharaman

Existing investment treaties expire on April 1, 2017; new ones to be negotiated on BIT draft model

The government will be sticking to the original deadline of April 1, 2017, for terminating all existing bilateral investment treaties even though the signatory nations continue to oppose the move.

However, Commerce and Industry Minister Nirmala Sitharaman on Tuesday defended the government's move saying that other nations were informed one year in advance, with ample time to approach India on negotiating new treaties.

India has been pushing to renegotiate the treaties based on new parameters which lay emphasis on attracting and safeguarding foreign investment while protecting public interest. The ambitious model bilateral investment treaty (BIT) — the draft of which was released in 2015 — is expected to provide the framework based on which individual agreements will be negotiated with other nations.

However, since most negotiations are not time bound, major economies including the European Union (EU) have raised concerns over the move which they term to be 'a unilateral action'.

Back in November, European Commission Vice-President Jyrki Katainen had protested the lack of any legal protection for investors from 23 EU nations which have existing BITs with India. These nations are slated to be terminated over the next two months.

Case in point, Netherlands, which was the sixth largest source of foreign direct investment into India accounting for $ 18.92 billion between 2000 and 2016 had its treaty terminated in November.

"The individual European nations handed over the power to negotiate a new investment treaty to the European Union who haven't approached us", Sitharaman said.

In its older avatar, the Bilateral Investment and Protection Agreement (BIPA) has been signed by India with 83 other nations, of which 72 have been enforced till now with the last one being Lithuania in 2011.

Overall, total investments from the EU stands at $64.07 billion or 26.78 per cent of the cumulative inflows received by the country between 2000 and 2014. The EU has asked that the validity of the treaty be revised for a period of six months as a starter before talks on a new treaty start, a diplomat said on conditions of anonymity. It is also unhappy with the Investor-State Dispute Settlement (ISDS) Mechanism which is part of the new model BIT.

This allows companies to seek international arbitration only when all domestic legal options have been exhausted. A number of countries including the United States and Canada have also made clear their concerns about the provision.

These developments are also set to affect the Bilateral Trade and Investment Agreement (BTIA) - the official free trade pact with the EU - which has been pending since 2007 on account of a number of bottlenecks. This is because the EU has asked the BIT issue to be resolved as a precondition to BTIA talks.

Negotiations had seen 16 rounds of talks at the level of chief negotiators till 2013, after which talks had stopped till July this year. The deadlock has continued then after over growing differences regarding greater market access sought by both sides for merchandise exports.

Commerce ministry officials said the EU has consistently sought lower import duties on a range of commodities such as automobiles and wine products.