Worried over frequent invocation of investment protection pacts by MNCs, the Commerce and Industry Ministry is in favour of gradually phasing them out saying that they hurt India's interest.
"The Bilateral Investment Protection Agreements (BIPAs) are not serving the interest of India. They are damaging the country's interest. Several countries are cancelling such treaties," an official source told PTI.
A working group -- comprising of officials from the Department of Industrial Policy and Promotion and the Department of Economic Affairs as well as other ministries -- has already held meetings to examine the utility of BIPAs.
It will also look into whether they have helped India attract foreign investments.
According to officials, BIPAs do not play any major role in attracting foreign direct investment.
"FDI comes because of healthy business and investment climate of a country. Certain departments of the government are not in favour of these pacts and they are of the opinion that agreements should not be extended beyond the sunset clause. It should be revoked at the earliest," said an official.
It was further pointed out that the Companies Act provide equal protection to domestic as well as foreign companies and MNCs having problem could easily approach courts.
The BIPA review talks have been put on hold following arbitration notices from foreign companies to recover investments.
Several global telecom firms, which had lost their 2G licences following a Supreme Court judgement, have slapped notices on the government citing breach of bilateral investment protection pacts.
Loop Telecom's investor Khaitan Holdings (Mauritius) Ltd has filed international arbitration against Indian government seeking damages of over USD 1 billion for 2G licences in which it had invested and were cancelled by Supreme Court on February 2, 2012.
British firm Vodafone too has invoked BIPA and has slapped an international arbitration notice to India in a tax case.
The objective of BIPAs is to promote and protect the interests of investors of either country in the territory of other nation.
Those favouring such pacts argue that they increase the comfort level of the investors by assuring a minimum standard of treatment in all matters and provides for justifiability of disputes with the host country.
India has so far signed BIPAs with 82 countries. Of these, 72 including those with Russia, Germany, the UK and the Netherlands have already come into force and the remaining agreements are in the process of being enforced.
