- An enterprise-based definition of investment
- Non-discriminatory treatment
- Protection against expropriation
- An Investor State Dispute Settlement (ISDS) provision requiring investors to exhaust local remedies before commencing international arbitration, and limiting the power of tribunals to awarding of monetary compensation.
- The Centre will not make it mandatory for states to sign these agreements but if any don’t, Center will inform counter-parties (other nations) and that foreign companies should keep that in mind before investing
- Effective implementation of International Bilateral Investment Treaty [BIT]
- Enhance Ease of Doing Business
- States that sign this agreement are likely to see greater FDI interest as they will be seen as friendlier investment destinations
- Investment will grow as states will be required to stick to their commitments
- Enhances the Cooperative Federalism by involving states
- Challenges with respect to upholding such agreement in international courts in case of disputes
- Questions raised on agreements for World Trade Organizations Pacts and others pacts to be required similar treatment as well
- Could affect Cooperative federalism as the State governments will not like the shifting of the blame for violation of a BIT from New Delhi to State capitals.
- Also, the State governments will also not like the Centre informing India’s BIT partner country that a particular State government has not signed the agreement and thus, by implication, is not a safe destination for foreign investment.
BIT [Bilateral Investment Treaty]
Agreement entered by two countries regarding promotion and protection of investments made by investors of these two countries in each others’ territories.