READERS will know that my constant preoccupation regarding economic policy is with fact: We know, and have known, what right policy is to follow. Yet, we don't allow right policy to happen.
Surjit S Bhalla writes on editorial page: Among several recent concrete examples are dire need for domestic deregulation, revision of 2016 Model Bilateral Investment Treaty and signing of trade deal with US. You have heard all excuses as to why we can't allow right policy to happen. World is in flux, what to do? Unreliable Trump is in control, so what to do?
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Take BIT. It went on to construct most obstructionist investment treaty in world. Two continuing records, and a steady supply of policy band-aids that fool nobody except apologists and those whose interests are served by India remaining closed and inactive.
Before going to international arbitration, foreign investor had to litigate in Indian courts for five years. Rest of world, those who receive foreign investment and those who send it, asks for consultation period - typically three to six months - in which parties try to settle, rather like cooling-off before divorce. India asked for 10 years that, in judicial system where five years does not produce judgment anyway. Even judiciary is criticised only cautiously, so as not to run afoul of India's near-unique contempt laws.
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Result? It only brought inordinate delay. New treaties since 2016 black-letter day, with UAE in 2024 and Israel in 2025, cut holding period to three years - still six times norm.
But wait - did not 2025-26 record a record FDI inflow of $94.5 billion? In same year, foreign investors repatriated or disinvested $53.6 billion, leaving $40.9 bn. Indian firms invested $33.3 bn abroad. Net foreign direct investment - just $7.65 billion. About 0.18% of GDP - and that is good news, being recovery from 0.02% in 2024-25. Still second-lowest in three decades.
For India aiming to be manufacturing hub, treaty that scares investors is self-goal. Bhalla says foreign firms already reinvesting profits, foreigners not here, Indians sending $33 bn abroad, saying something else.
Tags: #BIT #SurjitBhalla #FDI #InvestmentTreaty #EconomicPolicy #ModelBIT #ForeignInvestment #UAE #Isra #Deregulation