Bilateral Investment Treaty Current Affairs - 2020

Claims against India under Bilateral International Treaty dismissed

The Bilateral International Treaty organization, an international arbitration tribunal recently dismissed all the claims against India.

Highlights

The claims against India was brought the organization by private firms in Cyprus and Russia. The claims were under Agreement between Government of Russian Federation and Cyprus for promotion and protection of investments. The claims have now been dismissed completely.

Bilateral Investment Treaty

BIT is an agreement that was established for FDI. It allows countries to set up rules for investments between each other. The treaty is the successor of the 19th century friendship, commerce and navigation treaty.

The first BIT was signed between Pakistan and Germany.

BIT ensures that foreign investors are treated equally as that of domestic investors. This is because, foreign investments are restricted by governments to promote domestic entrepreneurs. For instance, US restricts foreign investment in only 5 sectors and China restricts foreign investment in 100 sectors.

Significance

India entered BIT in the mid-90s. It is important for India to sign BIT to make conditions favourable for foreign investors. While most of the treaties in the world focus on ‘most favored Nation’ treatment, BIT treats foreign countries equally.

India and BIT

According to the data of Ministry of Finance, India has so far signed BIT with 75 states. Out of these 66 are already in force and 9 are yet to be entered into force. India has signed 40 BITs with less developed and developing nations.

As every other country, India has set its own BITs clauses. BIT clauses of India is not the same for all the countries. The most important feature of India’s BITs is that it does not provide right to make investment in India to the signatories. Every investment has its own rules fixed by India.

Cabinet approves Bilateral Investment Treaty between India and Belarus

The Union Cabinet has approved signing and ratification of Bilateral Investment Treaty (BIT) between India and Belarus on Investments. The Cabinet also approved Memorandum of Understanding (MoU) signed between India and Belarus in oil and gas sector.

Bilateral Investment Treaty (BIT)

The BIT will increase investment flows between two countries. It is also expected to improve the confidence of investors resulting in increase in FDI and Overseas Director Investment (ODI) opportunities. It will also have positive impact on employment generation.

The signing and ratification of BIT will work as strategic initiative for India as Belarus is member of Eurasian Economic Union (EAEU). India has already initiated BIT text with Kyrgyz Republic and is in talks with Russia for new BIT which are members of EAEU based on Model BIT text released in December 2015.

MoU in oil and gas sector

Under it, both sides will work towards establishing cooperation in areas of upstream and downstream activities, capacity building, enhanced oil recovery, technology transfer and development of mature fields in India. It is envisaged to enhance the economic and commercial cooperation between two countries in oil and natural gas sector. It will also promote bilateral relationship between India and Belarus.

India-Belarus Bilateral Relations

India’s relations with Belarus are traditionally warm and cordial. India was one of first countries to officially recognize Belarus as independent country in 1991. Bilateral relation between both countries is marked by broad understanding on issues of mutual interest.

Cooperation in science and technology and defence is important aspect of India-Belarus bilateral relations. Two-way bilateral trade amounted to US$ 402 million in 2016. The trade balance remains in favour of Belarus primarily on account of imports of Potash. Belarus has been supportive of India’s candidature for permanent seat at UNSC. Belarus also supported India at NSG meeting in Seoul in April 2016.