India may restart bilateral investment treaty talks with UK as model text nears finalisation

New Delhi: India could soon restart talks on a proposed bilateral investment treaty (BIT) with the United Kingdom, with the government close to finalising the model text for such agreements, people familiar with the matter said.

Internal discussions on the draft are nearly complete and the union cabinet is expected to take it up soon. However, the final terms of any bilateral agreement will be settled through mutual negotiations, officials noted.

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"We hope to restart talks with the UK on the investment treaty," one of the persons said.

The free trade deal between India and the UK came into effect on July 15 along with an agreement on social security agreement, called Double Contribution Convention (DCC). However, talks on an investment agreement did not make any headway and were put on hold. Britain had pressed for inclusion of taxation issues within the ambit of the treaty, which India is not comfortable with.

The proposed model text is also unlikely to bring taxation within the ambit of the treaty, but the government is examining several measures including relaxing the five-year time frame for exhaustion of local remedies before an investor can take state to arbitration and a change in definition of investment to make it lucrative, people cited above said.

Economic affairs secretary Anuradha Thakur said at an event in August that the government is reviewing its bilateral investment treaty model to make it friendlier for foreign investors, which could be taken up by the cabinet soon.

BITs came into focus after India lost several international arbitration cases including in a dispute related to Cairn Energy Plc and Devas Mauritius Ltd. New Delhi, subsequently, amended the text of the model investment treaty in 2015.

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New Delhi, which is now keen to become part of global supply chains, and eyeing trade pacts with several developed countries, wants investment pacts to strike a balance in its model BIT to safeguard foreign investment without compromising national interest.