Foreign Investment Current Affairs - 2020
On May 21, 2020, the Government of India amended General Financial Rules to make sure the goods and services that are of value less than Rs 200 crores are procured from domestic firms.
The GFR 2017 (General Financial Rules) have been amended by the Central Government. Under the new amendment, global tenders henceforth will be disallowed in government procurement that are of value Rs 200 crores. This was announced in Atma Nirbhar Bharat Abhiyan.
General Financial Rules
The GFR are set of rules that deal with matters that involve public finances. They were first issued in 1947 bringing together all the existing orders. They are instructions that pertain to financial matters.
The GFRs were modified in 1963 and 2005.
The GFR 2017 was revised in 2017 to make sure an organization manages its business without compromising its flexibility.
Tendering is a process where bids for a project are accepted. Now, global tendering is tenders from foreign countries or through foreign investment. “Disallowing Global Tenders” is stopping foreign investments to a particular threshold to boost indigenous companies.
Tags: Atma Nirbhar Bharat Abhiyan • Foreign Investment • General Financial Rules • Indigenisation • Nirmala Sitaraman
The Bilateral International Treaty organization, an international arbitration tribunal recently dismissed all the claims against India.
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.
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.