{"id":115393,"date":"2021-06-29T21:06:57","date_gmt":"2021-06-29T15:36:57","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=115393"},"modified":"2021-06-29T21:06:57","modified_gmt":"2021-06-29T15:36:57","slug":"rattling-foreign-investors","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/rattling-foreign-investors\/","title":{"rendered":"Rattling foreign investors"},"content":{"rendered":"\n<p>Source: <a href=\"https:\/\/epaper.thehindu.com\/Home\/ShareArticle?OrgId=GEO8NCJ2E.1&amp;imageview=0\">The Hindu<\/a><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Relevance<\/strong>: Attracting more FDI is crucial for India&#8217;s economic recovery after the pandemic.<\/p>\n<p><strong>Synopsis<\/strong>:\u00a0 Regulatory risks and uncertainty in following the rule of law will discourage FDI in India.<\/p>\n<p><strong>Background<\/strong><\/p>\n<ul>\n<li>The Commerce Ministry recently reported that India attracted the highest ever FDI of $81.72 billion in 2020-21.<\/li>\n<li>However, several economists argue that the surge in FDI inflows is driven by short-term portfolio investment inflows and a few major acquisition deals involving select corporations.<\/li>\n<li>Further, Government&#8217;s disputes with big companies like Vodafone and Cairn Energy, on retrospective taxation, will shake the confidence of foreign investors.<\/li>\n<\/ul>\n<p><strong>Barriers to FDI in India: Regulatory risk <\/strong><\/p>\n<ul>\n<li>Honoring contracts and enforcing awards are vital to attracting the confidence of FDI investors. However, a lack of confidence in the host state\u2019s credibility towards the <strong>rule of law<\/strong> hampers FDI investments. Following are some such examples.<\/li>\n<li>For instance, last year India had lost two high-profile bilateral investment treaty (BIT) disputes with <strong>Vodafone and Cairn Energy<\/strong> on retrospective taxation.<\/li>\n<li>Further, Cairn has launched legal proceedings in the U.S. to enforce the arbitral award of $1.2 billion by seizing the assets of Air India.<\/li>\n<li>Apart from this, the other set of high-profile BIT disputes comes from the cancellation of an agreement between <strong>Antrix, and Devas Multimedia<\/strong>. The agreement was arbitrarily annulled on the grounds of national security.<\/li>\n<li>This annulment led to a commercial arbitration between Antrix and Devas Multimedia at the International Chambers of Commerce (ICC),<\/li>\n<li>However, India lost the case. The <strong>ICC arbitration<\/strong> tribunal ordered Antrix to pay $1.2 billion to Devas after a U.S. court confirmed the award earlier this year.<\/li>\n<\/ul>\n<p><strong>India\u2019s willful noncompliance attitude towards adverse judicial rulings<\/strong>.<\/p>\n<ul>\n<li>What is more worrisome is that whenever India loses a case to a foreign investor, immediate compliance rarely happens. Instead, efforts are made to delay the compliance as much as possible.<\/li>\n<li>For instance, After the ICC award, Indian agencies started investigating Devas accusing it of corruption and fraud.<\/li>\n<li>Last month, the National Company Law Tribunal (NCLT) ordered the liquidation of Devas on the ground that the affairs of the company were being carried on fraudulently.<\/li>\n<li>Further, the NCLT directed the official liquidator to prevent Devas from perpetuating its fraudulent activities and abusing the process of law in enforcing the ICC award.<\/li>\n<li>This has led to, Devas issuing a notice of intention to initiate a new BIT arbitration against India.<\/li>\n<li>The non-compliant behaviour on India\u2019s part shows a willful disobedient attitude towards adverse judicial rulings.<\/li>\n<li>This will not help India in attracting global corporations to its shores to \u2018make for the world\u2019<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: The Hindu &nbsp; Relevance: Attracting more FDI is crucial for India&#8217;s economic recovery after the pandemic. Synopsis:\u00a0 Regulatory risks and uncertainty in following the rule of law will discourage FDI in India. Background The Commerce Ministry recently reported that India attracted the highest ever FDI of $81.72 billion in 2020-21. However, several economists argue&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/rattling-foreign-investors\/\">Continue reading <span class=\"screen-reader-text\">Rattling foreign investors<\/span><\/a><\/p>\n","protected":false},"author":10316,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[],"class_list":["post-115393","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":1700798628,"cached_date":1704662909},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/115393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=115393"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/115393\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=115393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=115393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=115393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}