Govt clears signing of investment treaty with Cambodia

The Dollar Business Bureau

The Cabinet has given its approval for signing the investment treaty with Cambodia – the Bilateral Investment Treaty (BIT). This is the first pact to be signed between the two countries on the basis of model text of BIT.

The cabinet meeting, chaired by Prime Minister Narendra Modi, has taken the decision.

The treaty is aim to protect and promote investments from either nation in the territory of the other nation with the purpose of enhancing flows of bilateral investment, according to an official statement.

“It is the first Bilateral Investment Treaty in accordance with the text of the Indian Model BIT, approved by the Cabinet in December 2015,” it added.

The investment treaty will motivate each nation to create favourable climate for the other country’s investors and to allow investments in compliance with the nation’s laws.

BIT is the model cleared by the Cabinet in December 2015. It is likely to eventually replace the prevailing BIPPAs (Bilateral Investment Protection and Promotion Agreements) that the country has inked with around 72 nations.

BIT excludes matter such as taxation with the purpose that foreign firms finding themselves in a row of tax with the Indian government will not be able to appeal the investment treaty as in the case of BIPPA.

The BIT model mentions that India or any other nation cannot expropriate or nationalise any asset of an international firm lest the rules are followed. The BIT mentions that the tribunals resolving disputes, that include international tribunals, can cross-question ‘public purpose’ and again examine a legal matter settled by judicial bodies of India.

The matters excluded in the model are government procurement, national security subsidies, taxation and compulsory licences in order to maintain the government’s regulatory authority. India contends that the tax matters can be resolved through the double taxation avoidance agreements (DTAA).