April 16, 1998
Investment Incentive Agreement between the Government of India and the US Administration entered into force today with the exchange of letters between Shri Yashwant Sinha, Finance Minister, Government of India and Mr. Robert Rubin, Secretary of the US Department of Treasury.
2. The Agreement was signed on November 18, 1997 at New Delhi. The intent of the Agreement is to promote and protect US investments into India by facilitating investment support to US investors from Overseas Private Investment corporation (OPIC), a designated agency of the US Administration. The Agreement is important in the context of the additional comfort it offers to potential US investors by way of investment support from OPIC.
(L-R: Mr. Robert Rubin, Secretary of Treasury, US Department of Treasury, Shri Yashwant Sinha, Finance Minister, Government of India, Shri Naresh Chandra, Ambassador of India to US)
3. The Agreement shall continue in force in perpetuity unless either Government gives a notice of its intent to terminate the Agreement, whereupon the Agreement shall terminate after six months from the date of receipt of such notice.
4. The Agreement incorporates the principle of reciprocity. For any investment support extended by Export Credit Guarantee Corporation of India, or any other designated agency of Government of India for Indian investments in -USA, provisions equivalent to those contained in the Agreement shall apply to Indian investments upon completion of constitutional or other legal processes of either Government and upon exchange of notes made at the initiative of either Government.
5. The Agreement enlarges the scope and nature of investment support or risk coverage extended to potential US investors by way of OPIC investment support OPIC investment support includes any debt or equity investment, any investment guarantee and any investment insurance or reinsurance provided in connection with a project in India. Investment insurance includes insurance against risks relating to inability to convert other currencies into US dollar, loss of investment due to expropriation, losses due to war, revolution, insurrection or civil strife etc.
6. The Agreement provides for dispute resolution mechanism for disputes between the two Governments in matters relating to the interpretation of the Agreement and in relation to claims arising out of acts attributable to the Government of India involving questions of liability under public international law, and includes recourse to international arbitration.
7. The Agreement shall apply to investment support by OPIC, if approvals from Reserve Bank of India, Foreign Investment Promotion Board, Ministry of Finance, Ministry of Industry or concerned agencies of the Government of India as may be specified, have been obtained for making of the loan, equity investment or any other form of investment underlying the investment support.
8. Taxation matters would continue to be governed by the Double Taxation Avoidance Agreement between India and USA.
9. This Agreement would replace and supersede the previous exchange of notes between the two governments of 1957, 1959 and 1966 which sought to protect US investments in India against currency non-convertibility and expropriation by providing risk coverage/insurance.
10. It is perceived that the signing of this Agreement would give a boost to US investments into India.