On Monday, the government announced that the enforcement of the new Bilateral Investment Treaty (BIT) between India and the United Arab Emirates (UAE), aimed at providing continuous investment protection for citizens of both nations.
This treaty comes in the wake of the expiration of the previous Bilateral Investment Promotion and Protection Agreement (BIPPA) on 12 September.
Key Takeaways
As the seventh largest source of foreign direct investment (FDI) in India, the UAE accounts for approximately 3% of the total FDI received, with a cumulative investment of around $19 billion from April 2000 to June 2024.
Conversely, India has invested approximately $15.26 billion in the UAE, representing 5% of its total overseas direct investments during the same period.
The Ministry of Finance stated that the newly established ‘India–UAE BIT 2024’ is likely to enhance investor confidence by ensuring a minimum standard of treatment and non-discrimination.
The treaty also includes provisions for resolving disputes through independent arbitration, creating a more secure investment environment for both countries.
“The BIT strikes a balance between investor protection and the state’s right to regulate, thereby ensuring adequate policy space,” the minister commented.
Key features of the treaty include a closed asset-based definition of investments, encompassing portfolio investments, and obligations against denial of justice and discriminatory practices.
Additional highlights of the Bilateral Investment Treaty include an Investor-State Dispute Settlement (ISDS) mechanism, which mandates that investors exhaust local remedies for a period of three years before arbitration can be pursued.
The Indian government emphasized that the signing of the BIT underscores the mutual commitment of both nations to bolster economic cooperation and foster a more resilient investment climate.
Meanwhile, bilateral trade between India and the UAE is likely to exceed the $100 billion target well ahead of the 2030 timeline, reflecting a significant year-on-year increase of 12.7%.
The UAE continues to hold its position as India’s third-largest trading partner and second-largest export destination, according to a recent report by Primus Partners.
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