In the past couple of years, India signed bilateral investment treaties (BITs) with a few countries — most prominently, with Israel and the UAE. The success of a BIT lies not in the headline investment numbers announced, but in the chances of a mutually-agreed-to framework leading to the effective implementation of such treaties.

Recently, EU President Ursula von der Leyen urged India and the EU to conclude pending investment agreement negotiations soon. Leyen believes the agreement will unlock the full potential of the free trade agreement (FTA) the two sides signed last year. Economic theory supports the idea that trade and investment are joined at the hip — more so when we consider the current realities of global supply chains.

But, the fact is that the EU and India initiated separate negotiations on trade and investment in 2022, and the trade talks alone reached their logical conclusion. An investment deal is yet to materialise — thanks to differences between the two sides on several aspects of investment protection, including taxation, the most favoured nation (MFN) clause, and most conspicuously, the investor-State dispute settlement (ISDS) mechanism. These differences seem to be irreconcilable at the moment.

That said,........

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