'BIT & FTAs two separate pacts & should continue to remain so'

Investment protection element provides a wide range of obligations & commitments bestowed upon foreign investors, which are expansive

NEW DELHI: Demands of certain developed nations from India to negotiate 'investment protection' under an FTA is inappropriate as negotiating the matter as part of a separate chapter under the trade pact could have larger and detrimental implications, source said.

Legally speaking, they said, the investment protection element provides a wide range of obligations and commitments bestowed upon foreign investors, which are expansive in nature. "Recently, a lot has been heard about countries that are desiring India to negotiate 'investment protection' elements vis-a-vis investment chapter as part of the free trade agreement (FTA). However, this is incorrect," one of the sources said.

For instance, the EU has been negotiating a separate investment protection agreement or treaty with India, and not as part of the India-EU free trade agreement. "Having 'investment protection' as a chapter of a FTA could have larger and detrimental implications even on the trade agreements' structure, especially when FTAs have specialized dispute settlement mechanisms which shall allow countries to take retaliatory measures in unrelated sectors, even for investment disputes," the source said. However, such a concern would not arise when investment protection agreements are negotiated independently and free from FTAs.