India, US to negotiate Bilateral Investment Treaty

17 Jul '13

2 min read

The Government of India has communicated its willingness to negotiate a Bilateral Investment Treaty (BIT) with the Obama Administration.

The Indian Government has signaled its acceptance and positive response towards a BIT, India’s Commerce and Industry Minister Anand Sharma said at a press conference after meeting US Trade Representative Mr. Michael Froman in Washington.

The move of the Indian Government comes a few days after the US and China agreed to restart discussions on a bilateral investment treaty.

In a BIT, governments commit to protect investments made in their territory by nationals of the other country.

A BIT between India and the US would provide protection to US investors from arbitrary, discriminatory or confiscatory Indian Government measures, enforceable by recourse to independent international arbitration, according to the US-India Business Council (USIBC).

Such a treaty could help bring additional investment in India, and also provide protection to Indian companies as they expand investments in the US.

The treaty for investment protection could also serve as a building block for a more comprehensive free trade relationship. The process could build confidence among various U.S. interests, including the Congress, of a more liberalized environment in India and a greater readiness by India to proceed with trade liberalization, within a framework of legally binding international commitments.

So far, the US has negotiated BITs with 47 countries, 40 of which are currently in force. In addition, the US also has nine free trade agreements (FTAs) in force with a total of 14 partner countries. Most of these FTAs contain investment protection provisions similar to those provided for in a BIT.

On the other hand India has signed Bilateral Investment Protection Agreements (BIPAs), which are similar to BITs, with 82 countries, of which 72 are already in force.

The date for the first round of talks on the treaty between the US and India is yet to be fixed.

At present, India-US annual bilateral trade is around US$ 106 billion. The USIBC has set a target of boosting the two-way trade in goods and services to US$ 500 billion annually by 2020.

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