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India and Uzbekistan Bilateral Investment Treaty (BIT)
Context:
India and Uzbekistan signed a Bilateral Investment Treaty in Tashkent, reflecting their commitment to enhancing economic cooperation.
About the BIT
- Purpose: The BIT aims to create a robust investment environment, promoting bilateral investments that benefit both economies.
- Investor Assurance: It boosts investor confidence by providing a minimum standard of treatment and non-discrimination, along with an independent arbitration forum for dispute resolution.
What is a Bilateral Investment Treaty (BIT)?
- Definition: A BIT is a reciprocal agreement between two countries that offers protection to investments made by nationals and companies of one country in the other.
- Goals: It aims to create a favorable investment climate and foster economic cooperation between signatory nations.
India’s BIT Framework
- New Model BIT (2015): India adopted a new Model BIT in 2015, replacing the earlier version from 1993.
- This new text serves as a template for negotiating future BITs and investment chapters in Free Trade Agreements (FTAs) and Economic Partnership Agreements.
Key Features of BIT
- National Treatment: Ensures that foreign investors are treated equally to domestic investors, except in specific sectors where exceptions are listed.
- Protection from Expropriation: Limits the host country’s ability to expropriate foreign investments unless for public purposes, non-discriminatory reasons, and with adequate compensation.
- Fair and Equitable Treatment: Guarantees fair treatment for foreign investors, though it does not automatically confer broader rights found in older treaties.
- Full Protection and Security: Investments by foreign investors receive full protection and security, aligned with host country laws.
- Dispute Settlement: Requires investors to first seek resolution within the host country’s legal framework before proceeding to international arbitration.
- Non-Discriminatory Treatment: Provides protection from discrimination against foreign investors, ensuring Most-Favored-Nation (MFN) treatment.
India-Uzbekistan Relations
Historical Ties
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- Cultural Connections: India and Uzbekistan share centuries-old ties rooted in the Silk Road, facilitating cultural, religious, and trade exchanges.
- Post-Independence: Relations strengthened after Uzbekistan gained independence in 1991.
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Political Relations
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- Strategic Partnership: Elevated to a Strategic Partnership during Uzbek President Shavkat Mirziyoyev’s 2018 visit to India.
- High-Level Engagement: Both nations frequently engage in high-level visits to deepen political and economic ties.
- Multilateral Collaboration: Cooperation in international forums like the United Nations and Shanghai Cooperation Organisation (SCO).
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Economic and Trade Relations
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- Trade Growth: India-Uzbekistan trade has expanded, though the potential remains largely untapped.
- Exports from India: Pharmaceuticals, machinery, electronic products, textiles.
- Imports from Uzbekistan: Fruits, fertilisers, raw materials.
- Bilateral Trade Agreement: The BIT protects investments, and efforts are underway to finalise a Preferential Trade Agreement (PTA).
- Pharmaceutical Sector: Indian companies supply about 25% of Uzbekistan’s pharmaceutical needs.
- Information Technology: Uzbekistan seeks Indian expertise in IT and digital governance.
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Defense Cooperation
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- Joint Military Exercises: Regular military exercises like DUSTLIK focus on counter-terrorism.
- Training and Capacity Building: India provides military training to Uzbek forces.
- Security Cooperation: Collaboration on counter-terrorism and intelligence-sharing, especially regarding Afghanistan.
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Cultural Relations
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- Cultural Exchanges: Engagements focus on arts, music, dance, and yoga. Hindi is widely taught, and Bollywood enjoys popularity in Uzbekistan.
- People-to-People Ties: Interest in India’s traditional medicine systems, such as Ayurveda and Yoga.
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Connectivity and Transportation
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- Chabahar Port Initiative: Collaborative efforts to utilise Chabahar Port to enhance connectivity with Afghanistan and Central Asia.
- International North-South Transport Corridor (INSTC): A project aimed at reducing transportation costs and time for goods between India and Central Asia.
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Energy and Renewable Resources
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- Energy Cooperation: India is interested in developing partnerships in natural gas and renewable energy.
- Nuclear Cooperation: A civil nuclear cooperation agreement focuses on knowledge and technology exchange.
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India’s Developmental Assistance
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- Lines of Credit: India has provided credit to fund infrastructure projects in Uzbekistan.
- Capacity Building Programs: Training and assistance through the Indian Technical and Economic Cooperation (ITEC) program in various sectors.
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Challenges
- Geopolitical Concerns: Instability in Afghanistan remains a concern for both nations.
- Trade Barriers: Bilateral trade is hindered by connectivity issues and regulatory barriers.
Recent Developments
- India-Central Asia Summit (January 2022): Both nations reaffirmed commitments to strengthen ties in trade, security, and energy sectors.
- Concerns over Terrorism: Joint concerns over terrorism in Afghanistan, emphasising the need for stability and security cooperation.