{"id":36066,"date":"2018-11-01T13:23:04","date_gmt":"2018-11-01T07:53:04","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=36066"},"modified":"2018-11-01T13:23:04","modified_gmt":"2018-11-01T07:53:04","slug":"bits-and-pieces-of-trade-with-israel","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/bits-and-pieces-of-trade-with-israel\/","title":{"rendered":"BITs and pieces of trade with Israel:"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/todays-paper\/tp-opinion\/bits-and-pieces-of-trade-with-israel\/article19311072.ece\"><span style=\"font-weight: 400;\">BITs and pieces of trade with Israel<\/span><\/a><span style=\"font-weight: 400;\">: (The Hindu, Editorial)<\/span> <b>India-Israel relationship: Trade and Potential BIT<\/b><\/p>\n<p><b>Context<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">The bilateral relationship growing and potential of Investments seems increasing.<\/span><\/li>\n<\/ul>\n<p><b>Growing trade relations<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Bilateral merchandise trade increased from $200 million in 1992 to around $4 billion in 2016, an increase of 2,000% in 25 years.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Cumulative foreign direct investment (FDI) inflows from Israel, from April 2000 to March 2017, stood at $122 million.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Comprising only 0.04% of total FDI inflows to India, there is enormous potential for Israeli investment in fields such as renewable energy and water management (drip irrigation and desalination).<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Defense production, which is at the heart of the \u2018Make in India\u2019 campaign, is another area with significant potential for Israeli investment, a move that will help India save billions of dollars it currently spends on importing weapons from Israel.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Israel is the third largest supplier of arms to India after Russia.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The U.S. Investment in defense production will also give a boost to domestic manufacturing, reduce dependence on bureaucratic state-owned ordnance factories and bring in new technology.<\/span><\/li>\n<\/ul>\n<p><b>New Bilateral Investment Trade (BIT) on cards<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">In 1996, India and Israel signed a BIT.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The BIT was reportedly terminated by India when it unilaterally discontinued 58 BITs recently.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">For a new BIT to be negotiated, both sides will have to start afresh.<\/span><\/li>\n<\/ul>\n<p><b>Challenges countering BIT between India \u2013 Israel<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">The investor-state dispute settlement (ISDS) provision that allows foreign investors to bring claims against a host state for alleged treaty breaches at international arbitral forums.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Foreign investors prefer international arbitration, which is faster and independent, over litigating in domestic courts.<\/span><\/li>\n<\/ul>\n<p><b>The Israeli model<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">The Israeli model gives an investor the choice to submit any investment dispute with a state to international arbitration if not resolved within six months through negotiations. <\/span><\/li>\n<li><span style=\"font-weight: 400;\">The Israeli model contains a broad most favoured nation (MFN) provision, a cornerstone of non-discrimination in international economic relations which is missing in the Indian model.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The absence of MFN, from Israel\u2019s perspective, would mean that its businesses would have no remedy under international law if India were to discriminate against it, say, by offering greater incentives to another defense manufacturer over an Israeli one.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">In the Israeli model, taxation-related measures are recognized as an exception only to MFN and national treatment provisions.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Foreign investors can still challenge taxation-related measures for violating other BIT provisions such as the fair and equitable treatment or expropriation.<\/span><\/li>\n<\/ul>\n<p><b>The Indian model<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">The Indian model imposes many procedural and jurisdictional restrictions on an investor\u2019s right to bring an ISDS claim.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">These include a foreign investor having to litigate in domestic courts for five years before pursuing a claim under international law.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">These requirements make it very difficult for a foreign investor to make efficient use of the ISDS provision.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The Indian model of 2016 defines investment narrowly as an enterprise (with its assets) that has to possess certain characteristics of investment including the investment having \u2018significance for the development\u2019 of the host country.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The Indian model excludes taxation altogether from the purview of the BIT.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Thus, the foreign investor cannot bring an ISDS claim even if taxes imposed are confiscatory, discriminatory or unfair.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">However, in the Israeli model, taxation-related measures are recognized as an exception only to MFN and national treatment provisions.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Foreign investors can still challenge taxation-related measures for violating other BIT provisions such as the fair and equitable treatment or expropriation.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">India\u2019s recent record in administering its taxation laws has made foreign investors jittery.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The World Investment Report 2017 issued by the United Nations Conference on Trade and Development also points out that tax-related concerns are a deterrent for some foreign investors to invest in India.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Thus, Israeli investors will not be comfortable if taxation is completely outside BIT\u2019s purview.<\/span><\/li>\n<\/ul>\n<p><b>Conclusion<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Indian position on BITs is very pro-state, offering limited rights and protection to foreign investors.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The Israeli position is the opposite.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">An India-Israel BIT looks difficult till both sides move away from their stated positions.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Both sides need to work towards having a BIT that reconciles investment protection with a state\u2019s right to regulate.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>BITs and pieces of trade with Israel: (The Hindu, Editorial) India-Israel relationship: Trade and Potential BIT Context The bilateral relationship growing and potential of Investments seems increasing. Growing trade relations Bilateral merchandise trade increased from $200 million in 1992 to around $4 billion in 2016, an increase of 2,000% in 25 years. Cumulative foreign direct&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/bits-and-pieces-of-trade-with-israel\/\">Continue reading <span class=\"screen-reader-text\">BITs and pieces of trade with Israel:<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-36066","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704880769},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/36066","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\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=36066"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/36066\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=36066"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=36066"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=36066"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}