The Cabinet on Wednesday approved the revised model text for the Bilateral Investment Treaty (BIT) with a view to enhancing protection of foreign investors in India as well as Indian investments abroad, but taxation matters will remain out of its ambit.
“The revised Indian model text for BIT will replace the existing Indian Model BIT,” an official statement read, following a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi.
The model BIT, which will be used for renegotiations of existing and new investment treaties, excludes matters such as Government procurement, taxation, subsidies, compulsory licences and national security to preserve the regulatory authority of the government.
“The new Indian model BIT text will provide appropriate protection to foreign investors in India and Indian investors in the foreign country in light of relevant international precedents and practices while maintaining a balance between the investor's rights and the Government obligations,” the statement said.
The revised model BIT will be used for renegotiation of existing BITs and negotiation of future BITs and investment chapters in Comprehensive Economic Cooperation Agreements (CECAs)/Comprehensive Economic Partnership Agreements (CEPAs) /Free Trade Agreements (FTAs).
“A BIT increases the comfort level and boosts the confidence of investors by assuring a level-playing field and non-discrimination in all matters while providing for an independent forum for dispute settlement by arbitration. In turn, BITs help project India as a preferred foreign direct investment (FDI) destination as well as protect out-bound Indian FDI," it added.