Nepal, India finalize investment protection agreement

Nepal has agreed to compensate Indian investors in Nepal for any losses they might suffer from non-commercial factors including change in tax structure and other policy level decisions.

The agreement reached during the finalization of the draft of Bilateral Investment Protection and Promotion Agreement (BIPPA) is expected attract more investment from southern neighbor in Nepal.

Technical officials from Nepal and India had taken part in the negotiation held in Kathmandu to settle the most contentious issue of ‘compensation for loss.’

The draft BIPPA, however, makes Indian investors liable to bear commercial risks and get insurance cover for disasters, riots and other types of damages.

The draft to the cabinet for final approval. The cabinet endorsement will be followed by signing ceremony at the higher political level between the two countries.

The draft agreement has provisioned that only the industries of substantial business volume are entitled to enjoy the facility as pledged in the agreement. ‘Substantial business’ refers to scale and structure of investment, employment and turnover of the business.

Officials said government would not be able to alter tax and other policies for the Indian Investors for at least 10 years of signing of the agreement once it comes into force. Indian companies can claim for compensation for possible loss if the government acted otherwise.

Among other things, the BIPPA promises Indian investors that the government will not nationalize the foreign investment project and also pledges national treatment to the Indian investment in Nepal.

- Asian Tribune -