India is not planning major changes to its system for resolving disputes involving foreign investors, despite longstanding concerns from international businesses over the country’s dispute settlement process, according to a source familiar with the government’s review of bilateral investment treaties.
Foreign companies have criticised India’s dispute resolution framework as lengthy and difficult, arguing that it could discourage further investment in the country.
Under the current system, disputes involving foreign investors must first go through India’s domestic courts for five years before investors can pursue international arbitration.
The government plans to retain the requirement that investors exhaust local legal remedies before seeking international arbitration, the source said.
However, a second government source said the five-year waiting period could be shortened to about two years as part of the ongoing review.
The government also plans to keep tax-related disputes outside the scope of investment treaties while preserving India’s authority to impose and collect taxes, the first source said.
The source described taxation as a “red line” for India, signalling that the government is unwilling to compromise on its sovereign taxing powers.
The two sources, who are government officials familiar with the discussions, requested anonymity because the details of the review have not been made public.
India’s federal finance ministry did not immediately respond to a request for comment.
Goodness Anunobi
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