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The Bilateral Investment Treaty (BIT), signed on February 13, 2024, in Abu Dhabi, ensures continuity of investment protection for investors in both nations, following the expiration of the earlier Bilateral Investment Promotion and Protection Agreement (BIPPA) signed in December 2013, which is set to end on September 12, 2024.
According to the Ministry of Finance, the BIT between India and the United Arab Emirates (UAE) officially came into effect on August 31. The UAE ranks as India's seventh-largest foreign direct investor, accounting for 3 per cent of the total Foreign Direct Investment (FDI) inflows with a cumulative investment of approximately USD 19 billion between April 2000 and June 2024. Meanwhile, India has invested around USD 15.26 billion in the UAE during the same period, representing 5% of its total Overseas Direct Investments. The new BIT is expected to further boost investor confidence, providing assurances of non-discriminatory treatment and the establishment of a secure framework for resolving disputes through arbitration. Key provisions of the 2024 BIT include protection against expropriation, transparency in transfers, and compensation for losses. The treaty also mandates a closed asset-based definition of investment, including portfolio investments, and provides legal safeguards against denial of justice and arbitrary treatment of investments. A notable feature of the agreement is the Investor-State Dispute Settlement (ISDS) mechanism, which allows for arbitration but requires investors to exhaust local remedies for at least three years before pursuing international arbitration. The treaty also carves out exceptions for state regulation, allowing governments to maintain policy space for taxation, subsidies, and other measures without compromising investor protection. This treaty marks a milestone in India-UAE economic relations, signaling a mutual commitment to fostering a resilient investment climate while safeguarding both countries' right to regulate and maintain economic sovereignty. With these protections in place, the BIT is expected to encourage increased bilateral investments, benefiting businesses and strengthening economic ties between India and the UAE. (ANI)
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