India and Uzbekistan have taken a significant step forward in their economic relationship by signing a bilateral investment treaty (BIT) aimed at protecting and promoting investments between the two nations. The agreement was formalized in Tashkent by Nirmala Sitharaman, Union Minister for Finance and Corporate Affairs of India, and Khodjayev Jamshid Abdukhakimovich, Deputy Prime Minister of Uzbekistan.
This treaty is designed to enhance the security and confidence of investors from both countries. It assures a minimum standard of treatment and non-discrimination, while also establishing an independent forum for resolving disputes through arbitration. Additionally, the BIT includes provisions to protect investments from expropriation, ensuring transparency in operations, facilitating transfers, and compensating for any losses incurred.
The BIT is expected to create a more favorable investment climate, paving the way for increased bilateral investments that will benefit businesses and economies in both India and Uzbekistan. As part of the broader economic collaboration, Uzbekistan has recently expressed keen interest in utilizing the International North South Transport Corridor (INSTC) and the Chabahar Port to enhance trade links with India.
Uzbekistan recently sent its first cargo to India using the INSTC, marking a pivotal moment in this new partnership. The BIT will not only protect investments but also allow for state regulatory rights, ensuring a balanced approach to economic development.
Over the past two years, trade between India and Uzbekistan has been growing, particularly through the INSTC. Efforts are underway to operationalize this route, which promises to significantly reduce travel time between Mumbai and St. Petersburg. This development follows discussions involving Russia and Azerbaijan, focusing on enhancing trade routes through Azerbaijan's territory.
In addition, Uzbekistan is exploring trilateral partnerships with India and Iran for utilizing the Chabahar Port, following India's recent ten-year agreement with Iran to manage the port.
As these developments unfold, the BIT is anticipated to strengthen economic ties and increase trade flows, fostering mutual growth for both India and Uzbekistan.
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