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In a significant move to bolster economic cooperation, India and the United Arab Emirates (UAE) have officially implemented a new Bilateral Investment Treaty (BIT), effective August 31, 2024. This treaty, signed on February 13, 2024, in Abu Dhabi, replaces the earlier Bilateral Investment Promotion and Protection Agreement (BIPPA), which lapsed on September 12, 2024, the Finance Ministry said on Monday.
A Robust Framework for Investment Protection
According to the release from the ministry, the BIT aims to enhance investment protection for both Indian and UAE investors, ensuring a stable and secure environment for cross-border investments. The UAE ranks as the seventh-largest source of Foreign Direct Investment (FDI) in India, contributing approximately $19 billion from April 2000 to June 2024. Conversely, India has invested around $15.26 billion in the UAE from April 2000 to August 2024, making up 5% of its total Overseas Direct Investments.
Key Features of the India-UAE BIT 2024
The India-UAE BIT 2024 encompasses several important provisions:
* A comprehensive asset-based definition of investments, which includes portfolio investments.
* Strong commitments against denial of justice, fundamental breaches of due process, targeted discrimination, and arbitrary treatment.
* Specific carve-outs for measures related to taxation, local government, government procurement, and subsidies.
* An Investor-State Dispute Settlement (ISDS) mechanism, requiring mandatory exhaustion of local remedies for three years before arbitration can be pursued.
* Provisions safeguarding against investments linked to corruption or fraud.
* Protections against expropriation, along with assurances of transparency, transfers, and compensation for losses.
“The enforcement of this treaty reflects our shared commitment to enhancing economic cooperation and creating a resilient investment environment. It is expected to instill greater confidence among investors and pave the way for increased bilateral investments,” the Finance Ministry stated in the release.
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