Syllabus: GS-III
Subject: Economy
Topic: Trade and External sector
Issue: Bilateral Investment Treaties
- Bilateral Investment Treaties (BITs) are agreements between two countries for the mutual promotion and protection of investments in each other’s territories, by individuals and companies.
- The first BIT signed by India was with the UK in 1994.
- Challenges faced by India w.r.t. BITs:
- Multiple investor vs state disputes at international arbitration centers.
- Burden on the public exchequer.
- This led to the adoption of the 2016 model BIT.
- The 2016 model:
- it was seen more as a protectionist measure rather than a nuanced and calibrated approach to encouraging foreign investment.
- Major trade principles such as “fair and equitable treatment” and “most favored nation” were absent.
- In 2021, the Parliamentary Standing Committee on External Affairs made several recommendations to revisit the existing BIT regime.
- Conclusion: Robust international trade and stable investments will be critical to India’s goal of a $5-trillion economy.
| Prelims Connect:
Most-favoured-nation (MFN): Under the WTO agreements, countries cannot normally discriminate between their trading partners. This principle is known as most-favoured-nation (MFN) treatment. |
