Wed Oct 30 19:00:56 UTC 2024: ## India and UAE Sign New Bilateral Investment Treaty, Marking a Shift in Investment Strategy

**New Delhi, India** – India and the United Arab Emirates (UAE) have entered into a new Bilateral Investment Treaty (BIT), coming into effect on August 31, 2024. This marks a significant step in strengthening economic ties between the two countries, particularly as India seeks to boost foreign direct investment (FDI) and achieve its $5 trillion economy target.

The BIT replaces the earlier Bilateral Investment Promotion and Protection Agreement (BIPPA) which expired in September 2024. While the UAE is a major investor in India, accounting for 3% of total FDI receipts and contributing over $19 billion in investments between 2000-2024, India’s previous model BIT had led to the termination of 68 out of 74 existing BITs due to concerns over potential investor lawsuits.

The new India-UAE BIT features notable changes from the previous model, indicating a more flexible and nuanced approach to investment agreements. Notably, the requirement for investors to exhaust local remedies for five years before resorting to international arbitration has been reduced to three years. This could potentially serve as a template for future negotiations with other countries, including the UK where a free trade agreement remains stalled due to similar disagreements.

Another key change is the inclusion of portfolio investments within the BIT’s scope, allowing investors holding financial instruments to utilize the investor-state dispute settlement mechanism (ISDS). This, however, raises concerns about potential disputes over financial instruments that may not contribute significantly to economic development.

While the new BIT signifies a positive step towards boosting economic cooperation, its long-term impact on India’s FDI landscape remains to be seen. The government is currently engaged in negotiations for free trade agreements with the UK, EU, and other countries, and the lessons learned from the India-UAE BIT will be crucial for navigating future agreements.

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