India negotiates BITs with different countries to boost foreign investment inflows: FM

India is negotiating bilateral investment treaties with different countries to boost foreign investment inflows, Finance Minister Nirmala Sitharaman said on Thursday. She said foreign direct investment (FDI) doubled to $596 billion in 2014-23 compared to 2005-14 inflows.

“To encourage sustained foreign investment, we are negotiating bilateral investment treaties with foreign partners in the spirit of ‘Grow India First’,” she said while presenting the mid-term budget 2024-25. India is negotiating the treaty with countries including the United Kingdom.

These investment treaties help promote and protect investments in each other’s countries. The agreements are important as India had previously lost two international arbitration cases against British telecoms giant Vodafone and UK-based Cairn Energy over retrospective taxation issues.

Commenting on the Bilateral Investment Treaty (BIT), economic think tank GTRI said that India, which aims to become the third largest economy, needs to align its treaties with global investment practices, address the negative perceptions created by the large-scale cancellation of treaties and reflect on it negotiation skills. It said in a statement that the new agreement should ideally address these concerns.

GTRI (Global Trade Research Initiative) said that by 2016, India had canceled 77 of over 80 bilateral investment agreements because they were not in India’s interest. “It is now renegotiating with 37 countries using the restrictive 2016 model bilateral investment treaty, which could lead to negotiations due to its narrow definition of “investment”, vague terms, and omission of principles such as “fair and equitable treatment” and most-favored-nation treatment. It takes a long time. Ajay Srivastava, co-founder of GTRI, said.

He added that the BIT model also requires investors to seek local solutions for at least five years before arbitration, making new BITs a challenge for other countries. Foreign direct investment (FDI) equity inflows into India fell 24% to $20.48 billion between April and September 2023, government data showed.

Total foreign direct investment (including equity inflows, reinvested earnings and other capital) fell 15.5% to $32.9 billion during the reporting period, compared with $38.94 billion in April-June 2022. Major investing countries include Singapore, Mauritius, the United States, the United Kingdom and the United Arab Emirates.

Computer software and hardware, trade, services, telecommunications, automobiles, pharmaceuticals and chemicals are some of the key sectors attracting FDI into India. Rising global interest rates and deteriorating geopolitical situation have impacted FDI inflows into India in 2022-23, an official said earlier.

(This story has not been edited by News18 staff and is published from associated news agency – PTI)