Deccan Herald | 25 January 2020
India inks first investment treaty with Brazil post-approval of new templates in 2015
by Anirban Bhaumik
India on Saturday inked an Investment Cooperation and Facilitation Treaty with Brazil – the first one after Prime Minister Narendra Modi’s Government in December 2015 approved a new template for such bilateral pacts and started renegotiating all similar agreements inked with other nations in the past.
Apart from the Investment Cooperation and Facilitation Treaty, Modi and Brazilian President Jair Messias Bolsonaro witnessed signing of altogether 13 pacts, including the ones to step up India-Brazil cooperation in the field of oil and natural gas, bio-energy, geology and mineral resources, cybersecurity, science and technology, animal husbandry and dairying, early childhood, health and traditional medicine. The two sides also inked a Mutual Legal Assistance Treaty.
Though Brazil has moved the World Trade Organization objecting to the support given by India to its sugar-cane growers, Modi and Bolsonaro on Saturday agreed that the issue would be settled through bilateral consultation.
Bolsonaro, who took over as Brazilian President a year ago, is currently on his first state visit to India. He will attend the Republic Day ceremony on the Rajpath in New Delhi on Sunday as the Chief Guest.
External Affairs Minister S Jaishankar and his Brazilian counterpart Ernesto Araújo signed the Investment Cooperation and Facilitation Treaty. This is the first such pact, which New Delhi signed with any other nation after reworking its draft template for the bilateral investment treaties in order to plug the legal loopholes that had allowed foreign companies to take advantage of the similar agreements inked in the past to seek international arbitration, challenging orders of the judiciary in India.
The new draft template of the investment treaty was approved by the Union Cabinet in December 2015. It provided for a new Investor State Dispute Settlement mechanism that required foreign investors to exhaust local remedies before going for international arbitration. The government scrapped India’s bilateral investment treaties with 58 countries – all pacts had been based on the 1993 template which had been susceptible to broad and ambiguous interpretations by arbitration tribunals.
Modi said that India was keen to take its ties with Brazil beyond the traditional areas of cooperation. “We are focussing on stepping up defence industrial cooperation between India and Brazil. We want to broad-base our defence cooperation,” Prime Minister said as he and Brazilian President addressed media-persons after a meeting at the Hyderabad House in New Delhi. Bolsonaro said that the 15 agreements inked on Saturday would further consolidate the already strong ties between Brazil and India.
Prime Minister and Brazilian President also agreed on an Action Plan to strengthen the strategic partnership.
Brazil is keen to share with India its state-of-the-art technology to boost ethanol production. The officials of Brazilian Government conveyed to their counterparts in India that increasing production of ethanol and blending it with gasoline would lessen the need for New Delhi to give subsidies given to the sugar-cane growers and millers, apart from cutting down the energy bills and reduce pollution.