India is probably in plans to stop treating the overseas investors on a par with the domestic ones till they set up a business in the country. This will mark a significant change in the position of the comprehensive trade as well as investment agreements from the previous government. This sort of move will be a piece with the nation’s finance ministry concerned that the country has given a lot of similar accords attaining a position in the overall negotiation of the investment agreements.
Technically, the government is doubtful to let what is called pre-establishment national treatment in the investment and trade agreements. With the plans of overhauling the strategy of the country in the trade engagement segment, the view is that this level planning field will be available mainly to the foreign investors as they have a presence called post establishment.
As per a government official, the thought is that only the post establishment treatment involved in the bilateral investment promotion agreements should be provided in such trade deals. The trade experts welcome this that is described as a course correction.
As per a trade expert and professor at the Jawahar Lal Nehru University, Biswajit Dhar, there was an unnecessary rush to formalize the trade deals and the country provided pre-establishment national treatment in most of them. This gives the foreign investors more rights than the ones based in India.
He further said that such treatment lets the foreign investors to follow the international arbitration against the national government on regulatory clearances including environmental approval that the domestic investors were not able to do.
The finance ministry was against the allowing of pre-establishment national treatment under the India-Asian trade deal, but it was overruled by the Manmohan Singh Cabinet. Most of the countries do not let this treatment as it can take away the flexibility of the government in the regulation of the foreign investments. The finance ministry is now handling the bilateral investment promotion agreements that provide post establishment national treatment to the investors from aboard.
There are concerns expressed in several quarters over the country getting a raw deal in several trade agreements that dents its manufacturing segment.
