Why Indonesia is Winning the FDI War While India Struggles
GS3Economy · S&T · Environment · Security· Industry, investment & MSMEs· Mains·
Why in news
An analysis highlights how Indonesia's shift toward a rule-of-law-based Bilateral Investment Treaty (BIT) model has outperformed India's 2015 restrictive BIT framework in attracting Foreign Direct Investment (FDI).
Background
Indonesia adopted a new BIT model prioritizing rule of law and transparency following disputes with foreign mining companies. India enacted a restrictive BIT in 2015, which the author attributes to investor disengagement and economic delays.
Facts for Prelims
- FactIndia enacted a restrictive Bilateral Investment Treaty (BIT) in 2015.
- FactIndonesia's new BIT model prioritizes rule of law and transparency.
For Mains
Q. Analyze how the legal framework of Bilateral Investment Treaties (BITs) influences a country's ability to attract Foreign Direct Investment (FDI).
Dimensions to cover in your answer
- Regulatory friction: Impact of restrictive BIT clauses on investor confidence and capital flight
- Legal certainty: Correlation between rule-of-law transparency and long-term FDI stability
- Policy divergence: Comparative analysis of Indonesia's and India's investment treaty evolution
Keywords: Foreign Direct Investment · Bilateral Investment Treaties · Rule of Law · Investor Confidence · Regulatory Framework
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