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Legalities bar EU investors in India

European companies want to invest in India but cannot if New Delhi does not extend a range of bilateral treaties that are about to lapse. Over the past nine years the EU and India have been locked in talks about agreeing a single trade and investment treaty that would open up Indian markets to European investors, and vice versa.

Those talks have ground to a halt without agreement on a range of issues, not least of which is the demand by India for 80,000 work visas. The EU has so far resisted those demands.

European businesses are extremely worried about a potential legal gap. In the best-case scenario, this will raise capital costs for companies wanting to do business in India. In the worst case, it could stop some investment altogether.

Western companies have been keen to invest in India in recent years to take advantage of the country’s 7.6 per cent annual growth rate and growing middle class. But they often face a range of legal difficulties, such as the insistence that in some sectors they must form local partnerships with Indian groups, agree to local sourcing demands as well as adhere to strict limits on how they can invest.

 
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