New Delhi: India is looking at a situation where it may not have a bilateral investment treaty with a large number of countries including those in the European Union (EU) on 1 April 2017. Commerce and industry minister Nirmala Sitharaman on Tuesday said India would unilaterally terminate all such existing treaties on 31 March, having given one year’s time to countries to renegotiate the treaties based on the model Bilateral Investment Treaty (BIT) passed by the cabinet.

Sitharaman said India has written to all the countries with which it has investment treaties to come forward and negotiate based on the draft BIT. “It is up to the member country to approach us. We have already given one year time for renegotiation,” Sitharaman said.

India brought out a new model BIT in December 2015, intending to replace its existing Bilateral Investment Promotion and Protection Agreements (BIPAs) and future investment treaties, after being dragged into international arbitration by foreign investors who sued for discrimination citing commitments made by India to other countries in bilateral treaties.

The model BIT approved by the cabinet excludes matters relating to taxation. Controversial clauses such as most favoured nation (MFN) have been dropped while the scope of national treatment, and fair and equitable treatment clauses, has been considerably narrowed down.

In the recent past, many multinationals including Vodafone Group Plc and Sistema have dragged India to international arbitration, citing treaty violation. In the case of White Industries versus the Government of India, for instance, the Australian investor cited a favourable substantive MFN provision in the India-Kuwait BIT that it said was absent in the India-Australia BIT. The Australian company, which argued for including the provision in the India-Australia BIT, won the case in 2012.

India has served termination notices to as many as 57 countries, including European nations with whom the initial term of the treaty has either expired or will expire soon. India wants to sign investment agreements bilaterally with individual EU member countries based on its model BIT though the EU is opposed to the idea.

The ambassador of a member country of the EU, speaking under condition of anonymity, said all existing BITs will continue to be applicable to all existing investments for another 10-15 years due to their “sunset” clauses. “So for another 10-15 years, existing investors can also sue the government,” he said.

“However, as soon as the existing BITs expire, no new investments will be made in India as banks and export credit agencies will refuse to finance or guarantee any investment into a country without a BIT,” he added.

The ambassador said the government’s hasty decision to terminate BITs may nullify its “Make in India” initiative. “Not a single EU member country has any interest whatsoever to negotiate a new BIT with India and there will be numerous conditions attached to a hypothetical EU-India BIT,” he added.

However, Sitharaman denied that lack of a BIT with a country will impact foreign investment inflows from that country. “We don’t have a BIT with many countries (like the US). That has not impacted investment inflows from that country,” she added.