Challenges Faced by Indian Companies Operating in Bangladesh
The resignation and departure of former Prime Minister Sheikh Hasina has created a political vacuum in Bangladesh, leading to uncertainty for Indian investors.
The new or interim government may adopt policies that are less favorable towards Indian companies, potentially impacting their operations and investments.
The previous “India out” boycott movement, driven by political opposition, could resurface or intensify, targeting Indian goods and investments
Changes in laws or new regulations introduced by a different government could adversely affect Indian companies' operations and profitability.
Role of Bilateral Investment Treaties (BITs)
BITs are treaties between two countries designed to protect investments made by investors from both nations, ensuring fair and equitable treatment.
BITs impose conditions on host states to prevent unlawful expropriation and discrimination against foreign investments.
Investor-State Dispute Settlement (ISDS): BITs allow investors to sue the host state in international tribunals if they believe their investment rights are violated.
India-Bangladesh BIT, Signed in 2009, it offers protection features such as fair and equitable treatment (FET)
but has been weakened by Joint Interpretative Notes (JIN) adopted in 2017, which limit some protections and adjust standards of treatment
Way Forward
Indian companies should utilize the India-Bangladesh BIT for protection against adverse regulatory actions, but be aware of the limitations imposed by the JIN.
Stay informed about political changes in Bangladesh and adapt strategies accordingly to mitigate risks.
Consider relying on domestic legal protections and contractual agreements alongside international treaties to safeguard investments
India should review and refine its approach to investment treaties to balance its interests as both an investor and a host country, ensuring effective protection for outbound investments.
Engage in diplomatic efforts to address potential hostility and work towards favorable trade and investment environments in host countries
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