India's unilateral cancellation of several Bilateral Investment Treaties may affect FDIs and its capital investments abroad.

-Backdrop-India unilaterally cancelled BITs with 50 nations recently.

-India recently adopted a model BIT,where more teeth is given to the host state's regulatory power,and thus more intervention in foreign business here.

-How is it harmful for FDIs to India?

>Lessens investor confidence due to lack of stability in policy making.

>India's infamous judicial system,where speedy resolution of disputes doesnt happen,also holds investors back.

>Unilateral termination of BITs may also result in a reply in equal measure for Indian investments abroad.

-What should be done?

>Amend the new model BIT to strike a balance between state regulation and interest of investors.

>Negotiate with existing BIT partners based on this balanced model.

>Withdraw the termination notices issued recently till the newly negotiated BIT text is finalised.

Source:The Hindu