According to a source with direct knowledge of the government's review of bilateral investment treaties, India does not intend to make significant changes to the mechanism for resolving disagreements with foreign enterprises.
Foreign firms operating in India have long complained that dispute resolution in the economy, which ranks third in Asia, is a lengthy, complex process and a significant obstacle to further investment.
Details on dispute resolution changes
Specifically, India mandates that disputes involving foreign companies must first be considered in local courts for five years before recourse to international arbitration is permitted. This principle of requiring prior use of domestic legal remedies, according to the source, will be maintained.
However, a second source reported that the five-year period might be shortened, possibly to two years.
Government stance on tax issues
The first source also stated that the government will keep tax disputes outside the scope of investment treaties and will not compromise on its sovereign right to taxation, calling this issue a 'red line' for India.
Both sources working within the government declined to disclose their identities as the details are confidential. A representative from the federal ministry of finance did not respond to requests for comment.