The Economic Times | 19 May 2022

Parliament Committee advises MEA to expedite Bilateral Investment Treaties

By Dipanjan Roy Chaudhury

The parliamentary committee of the external a<airs ministry has called for fast-tracking signing of bilateral investment treaties and investments to facilitate economic growth, observing in a recent report that the number of pacts signed by India after 2015 and those under negotiations are inadequate.

It said the ministry should facilitate such pacts since it is in charge of negotiations and suggested that the process of an investment protection agreement with the US and a standalone investment agreement with the EU be started and concluded early so as to contribute to investments in priority sectors and high technology manufacturing.

The committee said it did not see any fresh result-oriented initiative taken by the ministry or any change in approach leading to a reasonable number of bilateral investment treaties, in keeping with the growing requirement of the country, and suggested that the ministry strengthen its coordination with the other ministries and departments concerned.

The committee said it was not satisLed with the progress of the ongoing negotiations with 37 countries and blocks. Currently, negotiations are on with 20 countries while they are still at the preliminary stage with the other countries and blocks.

While acknowledging the realities of negotiations with sovereign governments, the committee said the long-drawn-out process of negotiations should be reduced, especially if there appears to be limited areas of convergence.

In its ‘action taken’ reply to the committee, the ministry said it has been coordinating with the respective Indian Missions abroad and proactively facilitating negotiations. However, it said that the Department of Economic A2airs of the Lnance ministry leads the Indian side at the negotiations and is responsible for the conclusion of negotiations and implementation of the investment treaties.

The committee, however, said the external a<airs ministry “cannot absolve itself” of the responsibility for conclusion of negotiations and Lnalisation of agreements, especially as the ministry has to play an instrumental role in this regard through a separate division i.e. the Economic Diplomacy Division for dealing with matters pertaining to investment treaties”. “Since there is a signiLcant impact of international investment agreements on FDI inUow and increased production under the BIT regime, such delays are not desirable at all,” it said.

The committee urged the ministry to extend all possible assistance to the Department of Economic A<airs for an early conclusion of negotiations and Lnalisation of investment agreements, noting that the proactive contribution of the ministry is all the more imperative as the country aims to be a $5 trillion economy by 2025, said the report.

It said the drafting of international treaties, whether investment related or trade speciLc, should be done in a manner so as to avoid any ambiguity or leave scope for wider interpretation by arbitrators and tribunals as well as abuse of certain provisions by investors. The external a<airs ministry should therefore work in close coordination with other ministries and departments and make a combined e<ort to develop in-house expertise and a panel of lawyers who have experience in investment treaty law, said the parliamentary standing committee.