Manmohan to meet Obama in Washington

 India may restart its negotiations with the United States on a bilateral-investment treaty during Prime Minister Manmohan Singh’s visit to Washington later this month, but will draw certain “red-lines”, including one to ensure that the agreement cannot be invoked to resist or protest implementation of orders by the country’s judiciary.

Though New Delhi has not yet completed the ongoing review of its own template of the Bilateral Investment Promotion and Protection Agreement (BIPPA), Singh and US President Barack Obama, may announce resumption of the paused negotiation on a similar treaty between India and the US when they meet in Washington on September 27.

India and the United States had three rounds of negotiations on a bilateral-investment treaty since August 2009, but the process was put on hold after the last round in June 2012, as New Delhi decided to review its own template for such agreements.

The move to review the template for the BIPPA came after Sistema Joint Stock Financial Corporation (JSFC) issued a notice to the Indian government, invoking India-Russia bilateral agreement in order to protect its investment in the wake of Supreme Court’s February 2, 2012, order to cancel its 2G telecom licence. 

The Vodafone International Holdings BV, too, had cited India’s bilateral agreement with the Netherlands to resist the government’s move to tax its acquisition of Hutchison Essar in 2007.

The Devas Employee Mauritius Pvt Limited and Children’s Investment Fund Management LLP had also served notices on the government invoking provisions of India’s bilateral agreements with Mauritius, the UK and Cyprus.

The Ministry of Finance is reviewing the BIPPA template in consultation with the Ministry of Commerce and Industry, Ministry of External Affairs and Ministry of Law and Justice and is likely to come out with a new draft text by November.

With the US persistently pushing India to “reinvigorate” the stalled negotiation for the BIPPA, New Delhi, however, has now agreed to restart the process and an announcement may be made when the prime minister travels to Washington.

New Delhi is likely to make it clear to Washington that it will sign a bilateral-investment treaty only after satisfying itself that no clause of the agreement should be invoked to challenge or resist implementation of any order from a court of law in India.

The government, which found itself in a tight corner after the Sistema JSFC invoked the India-Russia agreement, is keen to ensure that no US company could do the same and take advantage of the proposed BIPPA between New Delhi and Washington.

India will also insist on insulating sovereign guarantee from being invoked in cases of commercial disputes between partner companies.

India received $ 10709.69 million in Foreign Direct Investment from the US between April 2000 and June 2012. India’s FDI to the US reached $ 3.3 billion in 2010, registering a 30 per cent rise from the previous year.

New Delhi has been projecting India’s investment requirements of more than $ 1 trillion in infrastructure over the next five years as an “enormous opportunity” for US businesses.