Foreign Investments in India Current Affairs - 2020

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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.

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India and ADB sign 91 million USD to improve water resources in Karnataka

On November 18, 2019, India and the Asian Development Bank (ADB) signed a 91 million USD agreement to improve water security of Karnataka. The loan will help to modernize the Vijayanagara Channel irrigation systems and also to increase the efficiency of Krishna river basin.

Highlights of the project

  • The Karnataka Government will strengthen the basin institutions for Integrated and Sustainable Water Resources Management Investment Programme.
  • The Programme plans to modernize about 442 kilometers of main distributaries in the Vijayanagara Channel network.
  • The programme has two project loans. It will help Karnataka water agencies to roll out efficient river basin management plans.
    • The first project will modernize the irrigation system
    • The second project will strengthen water governance

Significance

  • The programme will help to save 1,700 million cubic metres that can be used on additional 160,000 hectares of farm land
  • The project will establish 30 water user cooperative societies. This will strengthen irrigation canals of the farmers.
  • It will help to improve efficiency of 84% of state’s total water use.

Asian Development Bank

The Bank is on the foot steps of achieving prosperous, resilient, sustainable and inclusive Asia and Pacific. Its goal is to eradicate poverty. In 2018 alone, the bank provided a loan of 21.8 billion USD funding several projects in the region

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