India Weighs Limited Changes to Foreign Investment Dispute Rules

India is not planning major changes to the way disputes with foreign companies are handled under bilateral investment treaties, according to a government source cited by Reuters. Foreign investors would still have to pursue remedies through Indian courts before seeking international arbitration.

The government may, however, shorten the current five-year requirement before arbitration can be pursued. A second source said the period could potentially be reduced to two years. Analysts said the limited changes could affect investor sentiment, as foreign businesses have long raised concerns about delays in India’s legal system.

India is also negotiating free trade and investment agreements with several countries and blocs, including the UK and European Union. The government is expected to retain taxation disputes outside investment treaties and maintain its sovereign right to impose taxes, with the cabinet expected to decide on the proposed changes soon.

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