In a significant development, India and the United Arab Emirates (UAE) engaged in discussions on Thursday regarding a potential bilateral investment treaty (BIT). This treaty has the potential to pave the way for substantial UAE investments in India’s critical sectors, including renewable energy, health, semiconductor manufacturing, and asset monetization, according to the Union Commerce Ministry.
This dialogue also saw leaders from both nations evaluating the progress made since the implementation of the Comprehensive Economic Partnership Agreement (CEPA), which officially took effect in May 2022. CEPA has been a landmark agreement designed to enhance economic cooperation between India and the UAE.
Moreover, during the UAE-India High Level Joint Task Force on Investments held in Abu Dhabi, the parties assessed the strides taken toward establishing a mechanism to expedite Indian investments into the UAE. The Indian delegation underscored the importance of strengthening this mechanism, especially in priority areas such as renewable energy and energy transition, as highlighted by the Commerce and Industry Ministry.
In a notable shift, India is reconsidering its approach to BITs. In 2016, India terminated most of its BITs and adopted a new template. This change in approach comes at a crucial juncture when India is actively engaged in negotiations for investment treaties and free-trade agreements with key trading partners, including the United Kingdom and the European Union.
Previously, India had annulled BITs based on older model texts established in 1993, following unfavorable judgments in multibillion-dollar disputes in international courts. The new model BIT included a clause emphasizing “exhaustion of local remedies,” placing a greater focus on state rights over investor rights.
Simultaneously, India and the UAE forged a strategic partnership agreement that aims to operationalize the UAE’s national domestic card scheme (DCS). This initiative seeks to stimulate the growth of e-commerce and digital transactions in the UAE, reduce payment costs, and bolster the country’s competitiveness in the global payments arena, as per the Union Commerce Ministry.
The strategic partnership involves NPCI International Payments Limited (NIPL), a wholly-owned subsidiary of the National Payments Corporation of India (NPCI), collaborating with Al Etihad Payments (AEP) for Domestic Card Scheme Implementation in the UAE. AEP is an indirect subsidiary of the Central Bank of UAE.
Under this agreement, NIPL and AEP will collaborate on building, implementing, and operationalizing the UAE’s national domestic card scheme. This solution offered by NIPL comprises a RuPay stack and value-added services, including fraud monitoring and analytics. NIPL will also assist AEP in formulating the operating regulations for their domestic card scheme. It’s worth noting that RuPay cards constitute over 60% of the cards issued in India.
The discussions between India and the UAE encompassed a wide range of critical areas, from investment treaties and economic partnerships to initiatives aimed at fostering digital transactions and payments in the UAE. These developments hold the potential to further strengthen the bilateral ties between the two nations.