Answer of the day-BIT

Q-What is BIT(Bilateral Investment Treaty). How successful is it for India? What are the issues involved with it?(12.5 marks)

Sol-

Bilateral Investment Treaty(BIT) is an agreement between two or more countries to promote foreign investment in the each others countries by offering various concessions and  smoothening of the process. It mainly includes clauses like

1.Applicability

2.Fair and Equal treatment

3.Most favoured and National Treatment

4.Expropriation

5.Dispute settlement between state, and between state and investors as well

India signed many BIT starting in 1990s

Following are the benefit India recieved due to BIT

1.Investment

2.Technology transfer

3.Management Skill

4.Economic development of the country

5.Employment

6.New products and services

Issues

1.Doubt that whether same benefit could be there without BIT

2.India is involved in around 20 disputes wrt BIT

3.Such dispute leads to depletion of funds in litigation and as payment of fine

4.Also gloabal sentiments towards India also get effected due to such disputes

5.Act as hindrance against Socio-Economic reform for eg-in case of Anti-tobacco legislation.

Way Forward

1.Balance between investment need and Socio-economic demand of the country should be there in model BIT, as recommended by Law Commission of India.

2.Making dispute resolution as clear and unambiguous terms in the model BIT

Government has provided new Model BIT which also some issues, which can be improved to served both above stated purpose.