NEW DELHI: Having cancelled investment treaties with about 50 foreign governments last year, India is struggling to convince some to accept new terms that make it harder to seek international arbitration for disputes, sources familiar with the talks said.From New Delhi's perspective those treaties, mainly struck in the 1990s when it was desperate for foreign capital, left it too exposed to potential claims awarded by international arbitrators To reduce that exposure, India has drafted a new model agreement that legal advisors say is similar to those used by other big emerging market economies like Brazil and Indonesia, but some of its foreign partners are baulking at the more restrictive approach. Prime Minister Narendra Modi has a strong mandate and there is more confidence in the ability of his pro-business government to get the under-achieving economy moving than there has been in any of its predecessors.Since Modi came to power in 2014, annual foreign direct investment flows into India have doubled to $46 billion in 2016 from $22 billion in 2013. "India needs further investments and Canada is willing, but we need a framework. Israel, for instance, does not oppose some of the provisions and the two nations could soon sign an accord, Business Standard, an Indian newspaper, reported on Wednesday.And while India remains a capital deficient country, some of its biggest companies have made major investments overseas and would be reassured if there were bilateral treaties in place to protect their interests.For now, the draft model treaty is a starting point for negotiations, the second source said, but India is in a good position to press for better terms. "India is finally flexing its muscles," he said.

Source: Economic Times January 19, 2018 06:38 UTC