India and UAE Strengthen Economic Ties with New Investment Treaty
On February 13, 2024, India and the United Arab Emirates (UAE) signed a new Bilateral Investment Treaty (BIT) in Abu Dhabi. This treaty ensures continued protection for investors from both countries, following the expiration of the previous agreement signed in 2013. The BIT officially came into effect on August 31, 2024.
Investment Highlights
The UAE is a significant investor in India, ranking as the seventh-largest foreign direct investor with investments totaling approximately USD 19 billion from April 2000 to June 2024. Conversely, India has invested around USD 15.26 billion in the UAE during the same period.
Key Provisions of the Treaty
The 2024 BIT includes several important provisions to protect investors, such as:
- Protection against expropriation
- Transparency in financial transfers
- Compensation for losses
- Legal safeguards against denial of justice and arbitrary treatment
The treaty also features an Investor-State Dispute Settlement (ISDS) mechanism, which allows for arbitration but requires investors to first seek local remedies for at least three years.
State Regulation and Economic Sovereignty
The treaty allows both countries to maintain policy space for taxation, subsidies, and other measures, ensuring that investor protection does not compromise economic sovereignty.
Impact on Economic Relations
This treaty marks a significant milestone in India-UAE economic relations, encouraging increased bilateral investments and strengthening economic ties between the two nations.
Doubts Revealed
UAE -: UAE stands for the United Arab Emirates. It is a country in the Middle East, known for its cities like Dubai and Abu Dhabi.
Bilateral Investment Treaty (BIT) -: A Bilateral Investment Treaty is an agreement between two countries to protect and promote investments made by investors from each country in the other’s territory.
Investment protection -: Investment protection means ensuring that the money and resources invested by people or companies from one country in another country are safe and secure.
Dispute resolution -: Dispute resolution is a way to solve disagreements or conflicts between investors and the government of the country where they have invested.
State regulation -: State regulation refers to the rules and laws set by a government to control or manage activities within its country, including foreign investments.
Foreign investor -: A foreign investor is a person or company from one country who puts money into businesses or projects in another country.