BIPPAs have a sunset clause of years after which they can be terminated, else they get automatically renewed. When asked about progress made on the totalisation agreement, Jaitley said bilateral issues can only be resolved by flagging them and by flagging them repeatedly. India and Canada expressed commitment to have a free trade pact, with PM Narendra Modi saying a roadmap will be laid for the market opening agreement by September. According to the joint statement, Nepal reiterated its support for India's candidature for permanent membership of the UN Security Council.
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It was published in Republica , October 26, , p. Rarely has the interest of general public been so intense on a bilateral economic issue and support of private sector so high than now.
Before breaking Nepal-India BIPPA down to the simplest terms, let me at the outset argue that most of the remonstrations have been outright illogical, misinformed, and pitched to score political points. BIPPA is a legal instrument that establishes specific rights and obligations to meet the primary purpose of protecting foreign investments against discriminatory measures i.
To ensure protection and promotion of investments, and to encourage capital flows along with the commitment to credible liberal economic policies, countries typically enter into investment protection agreements like BIPPA. In principle, it ensures reciprocal encouragement, promotion and protection of investments, thus enabling conditions conducive to increase investment by investors.
It guarantees rights of foreign investors, and ensures them fair and equitable treatment, security, and dispute resolution mechanism. The contracting parties are obliged to treat investments at least as favorably as they do to domestic and third party foreign investments. In case of nationalization or expropriation of investment, nondiscriminatory compensation is guaranteed.
Investors are allowed to freely transfer returns to investment. Dispute resolution could happen both at the level of investors and a contracting party or two governments, i. While a majority of the issues in the agreement between Nepal and India are similar to other BIPPAs signed internationally, a few provisions and scope of definitions have created confusion and led to misinformed debate. To avert confusion, it specifically defines what constitute indirect expropriation having an equivalent effect to direct expropriation without formal transfer of title or outright seizure and how it is determined a case-by-case, fact-based inquiry considering a set of relevant factors outlined in the agreement.
Furthermore, in case of losses because of war, armed conflict, emergency or insurrection or riots, Indian investors should be treated and compensated as we do to our own investors or to third party investors. This addresses the confusion regarding if we will have to compensate for events internal to firms such as labor strikes and supply-side issues such as increase in cost or decrease in profits or increase in losses resulting from load-shedding.
The investors, based on the laws of the host country, can ask for review of compensation being offered. Additionally, while the interpretation of these provisions is subject to contention, it should be realized the scope of the definition of these issues apply equally to investments in both countries.
It is not applicable to compensation claims made before the enforcement of the agreement, which means that some Indian companies like UTL and Dabur Nepal cannot claim compensation for losses already inflicted upon their business. The Nepal-India BIPPA remains in force for ten years and will be automatically extended thereafter unless one of the countries intends to terminate it.
On this respect, latest studies show that investment protection agreements like BIPPA indeed have positive impact on FDI, especially when it flows to low income countries from relatively high income and high exporting countries.
The impact is higher in countries with weak domestic institutions because investors feel relatively more confident investing in the country following investment protection agreements.
Regarding employment, there is evidence that, on average, foreign investors pay relatively higher wages and employ more workers than domestic counterparts in certain sectors, particularly manufacturing. We have already seen this to hold true in our case as well. The BIPPA has definitely given more confidence to Indian investors on investment protection and have shielded them from losses due to arbitrary policy changes.
However, BIPPA is not panacea for all industrial ills and a substitute for real policy reform domestically that could increase foreign and domestic investments. For investments to increase sizably, Nepal needs to address constraints such as lack of power supply, inadequate supply of infrastructures , labor disputes , rising cost of raw materials, policy inconsistencies, and high interest on credit to key sectors.
The major determinants of FDI are macroeconomic, policy and political stability; large and growing market size; and being in proximity of emerging countries with large market size so that goods could be exported there. While Nepal has large markets enveloping it and the BIPPA has guaranteed investment certainty to some extent at the policy level, it urgently needs to fix the others factors restraining investment.
FDI inflows percent of gross fixed capital formation to Bangladesh and India are about 3. Most of the debate over BIPPA is based on misinformation and inaccurate comprehension of the scope and depth of the agreement.
While the private sector has openly welcomed BIPPA, selfish political leaders are politicizing it to make themselves heard by hook or by crook. Similarly, some influential leaders have been arguing that BIPPA is against the interest of our country and the workers.
These arguments are senseless, baseless and outright illogical. Importantly, the self-centered leaders opposing BIPPA should explain how exactly Nepal was dominated and workers rights eroded by signing such agreement with five countries before it was done India. In our investment strapped economy, more investment is definitely a good thing and is in our national interest because it will lead to more jobs, revenue and potentially stimulate growth. In whichever way the leaders might justify their claims, the fact is that all these illogical and inconsistent assertions against BIPPA are being raised to score political points, which at times are against our national economic interests of stimulating growth and generating more jobs and employment opportunities.
However, it cannot be a substitute for the badly needed policy reforms on improving overall investment climate. I am confused here, perhaps I am too dumb to understand this but doesn't capitalism mean private risk and private return, when did it become private risk and social loss?
This is potentially very dangerous, this reminds me of the recent bail out in the United States. In case an Indian firm were to lose money because of another civil war for example, the Nepali tax payers will have to compensate for their lose. I understand that this could encourage Indian investment into the country and this is to give assurance that nothing wil go wrong but If those firms who take the risk to do business in Nepal lose money due to political instability then they should lose money like all the other companies.
Thats business, high risk; potentially high returns. Its the name of the game. For FDI Inflow it's awesome step it is useless to have closed system in the era of globalization..
But have to take this risk because as they say "we have to choose less evil". Pages Home About Contact. Misinformed debate Most of the debate over BIPPA is based on misinformation and inaccurate comprehension of the scope and depth of the agreement. National interest In whichever way the leaders might justify their claims, the fact is that all these illogical and inconsistent assertions against BIPPA are being raised to score political points, which at times are against our national economic interests of stimulating growth and generating more jobs and employment opportunities.
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India-UAE BIPPA: Government builds safeguards to protect itself
Commerce Secretary Shubhashish Bose, who had led the Bangladeshi delegation, stated that as BIPPA will facilitate bilateral investment by ensuring necessary protection to investors of both countries, it would be best to conclude BIPPA at the earliest. Similarly, Bangladesh assured that their concerned authority will examine the draft of BIPPA upon its receipt and that the authority would take the necessary measures for early conclusion of the agreement between the two nations. In terms of finalising the operational modality for transit cargo between Nepal and Bangladesh, the latter has suggested Nepal to submit its revised draft on the issue through diplomatic channel for its consideration and assured it would be taken into account on a priority basis. The commerce secretaries, however, failed to come to an agreement on duty-free market access to Nepali products in the Bangladesh market and preferential market access to 50 Bangladeshi products in Nepali market, as both sides agreed that the list needed to be revised.
BIPPA Agreement between Nepal & India_Final 21 Oct
The Government of Nepal and the Government of India hereinafter referred to as the Contracting Parties ; Desiring to create conditions favourable for fostering greater investments by investors of one State in the territory of the other State; Recognising that the encouragement and reciprocal promotion and protection of such investments are essential to stimulate private sector initiative and will increase prosperity in both States; Have agreed as follows:. ARTICLE 1 Definitions For the purposes of this Agreement: a companies mean: i ii b in respect of Nepal: corporations, firms and associations incorporated or constituted or established under the law in force in Nepal; in respect of India: corporations, firms and associations incorporated or constituted or established under the law in force in any part of India. In respect of India: natural persons deriving their status as Indian nationals from the law in force in India;. ARTICLE 2 Scope of the Agreement This Agreement shall apply to any investment by investors of either Contracting Party in the territory of the other Contracting Party admitted in accordance with its laws and regulations, whether made before or after coming into force of this Agreement, but shall not apply to any dispute concerning an investment which arose, or any claim which was settled, before its entry into force. ARTICLE 3 Promotion and Protection of Investments 1 Each Contracting Party shall encourage and create favourable condition for investors of the other Contracting Party to make investments in its territory, and admit such investments in accordance with its policies, laws and regulations. Investments and returns of investors of each Contracting Party shall at all times be accorded fair and equitable treatment in the territory of the other Contracting Party.