Cabinet’s Approval for India-UAE Bilateral Investment Treaty

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today has given its approval for signing and ratification of Bilateral Investment Treaty between the Government of the Republic of India and the Government of the United Arab Emirates .

Benefits of the treaty

The Treaty is expected to improve the confidence of the investors, especially large investors, resulting in an increase in Foreign Investments and Overseas Direct Investment (ODI) opportunities and this may have a positive impact on employment generation .

The approval is expected to increase investments in India and is likely to help in realizing the goal of Atmanirbhar Bharat by encouraging domestic manufacturing, reducing import dependence, increasing exports etc .

Background of the treaty

The Treaty is a comprehensive agreement covering all aspects of investment protection and promotion. It provides for fair and equitable treatment, national treatment, most favoured nation treatment, protection from expropriation, free transfer of funds, dispute settlement mechanisms etc.

The Treaty is based on the Model Bilateral Investment Treaty (BIT) of India, which was approved by the Cabinet in December 2015. The Model BIT aims to balance the rights and obligations of investors and host states, and to preserve the policy space and regulatory autonomy of the host state.

The Treaty is also in line with the Comprehensive Strategic Partnership between India and UAE, which was announced during the visit of Prime Minister Modi to UAE in August 2015. The Partnership envisages cooperation in various fields, including trade, investment, energy, defence, security etc.

Significance of the treaty

The Treaty is significant as UAE is one of the largest investors in India. According to the data from the Department for Promotion of Industry and Internal Trade (DPIIT), UAE was the fifth largest source of FDI inflows into India during April 2000 to September 2020, with a cumulative amount of USD 17.79 billion.

The Treaty is also important as India is one of the largest trading partners of UAE. According to the data from the Ministry of Commerce and Industry, UAE was the third largest export destination and the fourth largest import source for India during 2019-20, with a total trade value of USD 59.12 billion.

The Treaty is expected to further enhance the bilateral economic relations between India and UAE, and to create a conducive environment for attracting more investments from both sides.