India to replace BIPAs with new pact to protect investments
1 min read 20 Nov 2014, 12:05 AM ISTFinance ministry moving cabinet with draft of a new agreement called Bilateral Investment Treaty
Premium
New Delhi: The government plans to replace bilateral investment protection agreements (BIPAs) with a new pact that seeks to plug loopholes and enhance legal protection of foreign investors in India as well as Indian investments abroad.
The finance ministry is moving the cabinet with a draft of a new agreement called the Bilateral Investment Treaty (BIT) saying there is a need to revisit existing BIPAs as they do not take into account the socio-economic objectives of government policy.
India has so far signed 83 bilateral trade and promotion agreements, of which 72 are in force, the finance ministry said in its website.
The need for a review of the BIPA framework arose following several multinational companies invoking the treaty against the government, people privy to the development said.
Global telecom firms which had lost their 2G (second generation) licences following a Supreme Court (SC) judgement, have slapped notices on the government citing breach of bilateral investment protection pacts.
Besides, companies like Vodafone and Nokia which are tangled in tax dispute too had evoked the BIPA and sent notices to India.
The model text of BIPA has been prepared to balance the objective of investor protection and the interest of nation, they said.
With respect to systemic issues, the new model introduces rules on conflict of interest regarding arbitrations and transparency. The model excludes taxation matters, sources said.
Under the new model of BIT, investor who have substantial business activities in the home state would be protected by the treaty. The proposed BIT would remain in force for a period of 10 years.
