PMO Calls On Commerce Ministry To Recommend Changes To Model Text Of Investment Treaty

The existing model text treaty has so far been accepted by only 7 nations, and majority of the developed countries have voiced their concerns regarding the text and provisions like dispute resolution

The treaty remains a major point of contention between India and the UK, as both nations try to finalise a free trade agreement and BIT.  ( Image Source :Getty )

The Prime Minister’s Office (PMO) called on the commerce ministry to look into the model text of the bilateral investment treaty (BIT) and urged the ministry to recommend revisions to help boost the ease of doing business, media reports stated. 

The existing model text treaty has so far been accepted by only seven nations, and majority of the developed countries have voiced their hesitation regarding the text and provisions like dispute resolution, reported PTI. These investments treaties are aimed at helping protect and promote investments amongst the countries. 

The report cited sources and said that an internal dialogue on the model text of the treaty will be held on Monday in the ministry with experts and lawyers. The meeting will include a presentation and an internal discussion on the matter. The development assumes great significance as India earlier lost two global arbitration cases against Vodafone and Cairn Energy plc regarding retrospective imposition of taxes. 

The PMO is further overseeing the issue and has sought a third-party perspective from the commerce ministry on the text, the report noted. While the BIT remains a subject matter of the finance ministry, the commerce ministry will look into seeking alternative opinions and provide suggestions to the authorities accordingly. 

One of the topics under negotiation by the ministry is investment facilitation. The treaty remains a major point of contention between India and the UK, as both nations try to finalise a free trade agreement and BIT. 

Experts stated that the BIT would remain in demand from the four-nation European bloc EFTA, including Iceland, Liechtenstein, Norway, and Switzerland. Earlier last month on March 10, the EFTA and India inked a FTA which pledged an investment commitment of $100 billion for India in 15 years and also removed or lowered the duties on several products like Swiss watches, cut and polished diamonds, and chocolates. 

The Global Trade Research Initiative (GTRI) noted that India needs to match its treaties as per the global investment practices, if the nation wants to achieve the goal of becoming the third largest economy in the world. The economic think tank urged the nation to look into the negative perception generated due to mass treaty cancellations and think about improving its negotiation skills. Notably, India cancelled 77 out of the more than 80 BITs by 2016, stating a mismatch with its interests.