In two minds

Ambivalent attitude towards foreign investors has its drawbacks

Yes, we offer protections for foreign investment, but no, we cannot say we won’t change our mind about it. This seems to have been the government’s mantra in its dealings with foreign investors, a prime example of which was the watering down of protections offered in a draft bilateral investment treaty (BIT) made public a few years ago. India’s ambivalence in this respect has been a cause for concern.

Yet, the tide may have turned. Not only does India have a growing need once again for foreign investment, but the government must also face pressures from within on account of its growing international footprint. If the many Indian companies that operate outside India need a level playing field, then surely they have to offer the same to foreign investors in India. Are they not two sides of the same coin? And can the government look the other way when foreign investors – many of whom they have actively wooed – face hurdles in India?

This month’s Cover story focuses on significant happenings in the world of BIT arbitration, used by both Indian and foreign investors to ensure their investments are protected against actions of the host-state. Delhi High Court recently refused an injunction sought by the government against an arbitration initiated by Vodafone under the India-UK bilateral investment promotion and protection agreement. The specifics of the case are somewhat long-winded but its outcome has pleased the arbitration community, who have applauded the anti-interventionist stand taken by the court.