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The enforcement of the new bilateral investment treaty (BIT) between India and the UAE ensures continued investment protection for investors from both nations, the finance ministry said on Monday.

The earlier bilateral investment promotion and protection agreement (BIPPA) between the two countries expired on 12 September.

“The signing and enforcement of the BIT reflects both nations’ shared commitment towards enhancing economic cooperation and creating a more robust and resilient investment environment,” the statement said.

“The treaty is expected to pave the way for increased bilateral investments, benefiting businesses and economies in both countries,” it added.

The UAE is the seventh-largest source of foreign direct investment (FDI) for India, with a share of about 3%. The cumulative investment from the West Asian country has been about $19 billion between April 2000- June 2024. 

India also made 5% of its total overseas direct investments in the UAE to the tune of $15.26 billion from April 2000-August 2024.

“India–UAE BIT 2024 is expected to increase the comfort level and boost the confidence of the investors by assuring minimum standard of treatment and non-discrimination while providing for an independent forum for dispute settlement by arbitration,” the statement said.

“However, while providing investor and investment protection, the balance has been maintained with regard to the state’s right to regulate and thereby provides adequate policy space,” it added.

Some of the key features of the new bilateral investment treaty include the closed asset-based definition of Investment with coverage of Portfolio Investment, treatment of investment with obligation for no denial of justice, no fundamental breach of due process, no targeted discrimination and no abusive or arbitrary treatment, among others, the finance ministry said.

“The treaty also provides for protection to investments from Expropriation, provides for Transparency, Transfers and Compensation for losses,” it added.