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Journalism of Courage
By: Arun S
Even as the United States is pushing for revival of talks on a proposed bilateral investment treaty (BIT) with India during President Barack Obama’s visit, a breakthrough is unlikely any soon as their respective model BIT texts — the starting point for negotiations — are almost poles apart.
The talks on a India-US BIT had begun as early as in August 2009, but have been seen little progress so far.
New Delhi has now incorporated stringent norms in its model BIT text (which is in the ‘final draft’ stage and awaiting Cabinet clearance) following foreign investors and MNCs, including Vodafone and Sistema issuing legal notices to the Indian government, invoking different BITs that India had inked with other countries.
The extreme position taken by India in its new model text could be rejected in toto by Washington, said sources.
These include provisions totally excluding tax issues as well as portfolio investments and derivatives from the BIT’s purview. The US model BIT text has not fully divested investors of their right to challenge the government’s tax-related decisions. Besides, it has also not excluded short-term investments and derivatives from protection under BIT.
The other main bone of contention would be India’s move to leave out the ‘most favoured nation’ clause (which mandates the signatory countries to accord equal treatment — in like circumstances — to investors from all countries).
