India and the United Arab Emirates (UAE) have into a , extending reciprocal investment protection to investors from both countries. The treaty, which was signed on 13 February 2024 in Abu Dhabi and took effect on 31 August 2024, continues the protections under the Bilaterial Investment Promotion and Protection Agreement, that expired on 12 September 2024.
The treaty provides all investors with a minimum standard of treatment, non-discrimination, national treatment along with an independent forum for dispute resolution through arbitration, which includes mandatory exhaustion of local remedies for three years.
The main objective of the treaty is to boost bilateral investment, increase investor confidence and comfort, and improve the business profits, benefits and economies of both countries. Ample policy space has also been extended to the respective countries to regulate.
The treaty ensures that investments will not be denied justice and there shall be no breach of due process or targeted discrimination or manifestly abusive or arbitrary treatment.
There is scope for tax relations, subsidies, grants and compulsory licences under the treaty. In addition, investments will be protected from expropriation and there are provisions for transparency, transfers and compensation for losses. Claims for investments involved in corruption, fraud, round tripping etc, are not allowed.
Both countries enjoy significant foreign investment, with the UAE providing 3% of foreign direct investment in India worth USD19 billion between April 2000 and June 2024, while FDI from India into the UAE is worth USD15.26 billion for the same period.
