EU investment pact soon

Two sides plan bilateral investment protection agreement

There is good news for European companies wanting to invest in India. The two sides are mulling over a bilateral investment protection agreement (BIPA).

While both are keen to ink an agreement, New Delhi has turned down EU's suggestion to include pre-establishment cases in the investment agreement.

Officials from both sides met in the Capital earlier this week to discuss a plan to boost bilateral cooperation. The plan is expected to be formalised during the visit of British Prime Minister Tony Blair to India later this year, after he takes over EU's presidency.

"We want to restrict the BIPA to only post-establishment cases. Including pre-establishment cases can jeopardise our ability to bargain at the World Trade Organisation, particularly in the area of services, on which we are very keen," officials told Business Standard.

Officials said India had conveyed to the EU that the two could explore the possibility of a comprehensive economic cooperation agreement, if the EU wanted the inclusion of pre-establishment cases.

Meanwhile, India is expected to finalise a BIPA with Canada within the next one month. Officials said the BIPA with Canada would also be limited to post-establishment cases.

The important elements of the BIPA include national treatment for foreign investment, most-favoured nation treatment for foreign investment and investors, free repatriation of funds, transfer of returns on investment, recourse to domestic dispute resolution and international arbitration for investor-state and state-state dispute.

India has so far signed BIPAs with 54 countries of which 41 have already come into force. These include BIPAs with the UK, the Russian Federation, Germany, Malaysia, Denmark, Sri Lanka, South Korea, Israel and Spain.