The US is keen to sign a “high-standard” bilateral investment treaty (BIT) with India that guarantees the same level of protection to investors of both countries, US ambassador Richard Verma said on Tuesday, indicating the difficulties in talks as India tries to keep tax disputes out of such treaties.
“We are looking for a negotiated outcome that yields the same minimum standards of protection for both Indian and US investors,” Verma said at a conference organised by the American Chamber of Commerce in India.
Officials of the both countries discussed India’s draft BIT model text at the end of March. “We know it (high standard BIT) is possible and doable,” Verma said, adding that it would enhance investor confidence in the Indian economy.
India has unveiled a model text recently for BIT that it wants to adopt for future treaties and form the basis for renegotiating over 80 existing ones. Among measures proposed to protect India’s interest, the draft BIT explicitly bars any enterprise from a treaty partner country from seeking relief in tax disputes under the treaty.
India is tightening the treaty to thwart attempts by companies involved in tax disputes with the government from seeking recourse to international arbitration and demand compensation if assets are attached under tax proceedings.
US enterprises such as Microsoft, Gillette India and Indian associates of US IT companies have been embroiled in tax disputes. Already, foreign companies such as Vodafone and Cairn Energy have dragged India to international arbitration to settle tax disputes.
Talking about the acceleration in economic ties between the two countries, Verma said the US Census Bureau has announced that bilateral (India-US) trade in goods and services has crossed $100 billion threshold last year (at $103 billion).
He said bilateral trade between the countries could reach $500 billion in the next few years as the economic partnership has attained a new momentum.