India-UAE Bilateral Investment Treaty: Strengthening Economic Ties and Investor Protections

 India and the United Arab Emirates (UAE) have further deepened their economic cooperation by signing a bilateral investment treaty, aimed at enhancing investor protections and fostering a conducive environment for businesses in both nations. Signed on February 13, 2024, in Abu Dhabi and coming into effect on August 31, 2024, this agreement builds on the foundations laid by the Bilateral Investment Promotion and Protection Agreement (BIPA), which expired on September 12, 2024.



Key Provisions of the Treaty

The treaty introduces a robust framework to provide investors with fair and equitable treatment. Some of the critical aspects include:

  • Minimum Standard of Treatment: Ensures that investors from both nations receive just and fair treatment, preventing arbitrary or discriminatory actions.

  • Non-Discrimination & National Treatment: Provides foreign investors the same legal protections and rights as domestic investors, ensuring a level playing field.

  • Dispute Resolution Mechanism: Establishes an independent forum for resolving disputes through arbitration, with a mandatory requirement for exhaustion of local legal remedies for at least three years before international arbitration can be pursued.

  • Protection Against Expropriation: Investments are safeguarded against unjust expropriation, with clear provisions for compensation in cases where expropriation is necessary for public interest.

  • Transparency & Transfer Provisions: The treaty promotes transparency in policy implementation and ensures smooth financial transactions related to investments.

  • Restrictions on Fraudulent Claims: Investments associated with corruption, fraud, or round-tripping are strictly excluded from protection under the treaty.

Enhancing Bilateral Investment & Economic Growth

The primary goal of the treaty is to:

  • Boost confidence among investors by providing a stable and predictable business environment.

  • Encourage greater capital inflows and facilitate trade between India and the UAE.

  • Support economic growth and development by enhancing mutual investments in key sectors such as infrastructure, energy, technology, and manufacturing.

Both countries have a strong history of foreign direct investment (FDI), with the UAE contributing USD 19 billion (3% of India's total FDI) between April 2000 and June 2024. On the other hand, Indian investments in the UAE have also reached USD 15.26 billion during the same period, signifying a thriving economic partnership.

Strategic Significance of the Treaty

This treaty is expected to play a crucial role in strengthening economic ties, reducing investment risks, and fostering deeper cooperation in emerging sectors. Additionally, it provides a framework for regulating tax relations, subsidies, grants, and compulsory licensing mechanisms, ensuring that policies remain investor-friendly while safeguarding national interests.

As both nations continue to expand their economic engagement, this bilateral investment treaty serves as a testament to the long-standing and growing India-UAE partnership, creating new opportunities for businesses and reinforcing investor confidence on both sides.

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