The Indian government announced on Monday that the Bilateral Investment Treaty (BIT) with the UAE, signed in February, has been enforced as of August 31, 2024.
The BIT, originally signed on 13 February 2024 in Abu Dhabi, replaces the earlier Bilateral Investment Promotion and Protection Agreement (BIPPA), which expired on 12 September 2023.
Enforcement of this pact with the UAE gives continuity of investment protection to investors of both the countries, as the earlier Bilateral Investment Promotion and Protection Agreement (BIPPA) between India and the UAE signed in December 2013 expired on September 12 this year.
A key provision of the treaty requires UAE investors to exhaust domestic legal remedies for at least three years before pursuing arbitration, compared to the previous five-year period under BIPPA. The agreement also includes protections against expropriation, ensuring transparency, fair treatment, and compensation for losses.
The treaty maintains a balance between investor protection and the state’s right to regulate, preserving policy space for India and the UAE. It also outlines restrictions on investor claims in cases involving corruption, fraud, or round-tripping.
The UAE is the seventh-largest source of foreign direct investment (FDI) in India, contributing 3% of the total FDI, with investments amounting to USD 19 billion from April 2000 to June 2024. In return, India has invested USD 15.26 billion in the UAE, representing 5% of its total overseas direct investments during the same period.
The treaty is expected to strengthen investor confidence and foster bilateral investments, benefiting the economies of both countries. The two nations also implemented a free trade agreement, effective from 1 May 2021, further enhancing economic ties.
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