Why in the news ?

India and Uzbekistan have signed a Bilateral Investment Treaty (BIT) aimed at boosting investor confidence and enhancing economic cooperation between the two nations. The treaty was formalized by Indian Finance Minister Nirmala Sitharaman and Uzbekistan’s Deputy Prime Minister Khodjayev Jamshid Abdukhakimovich in Tashkent. This BIT assures protection for investors from both countries, providing a minimum standard of treatment and non-discrimination while facilitating dispute resolution through arbitration.

About BIT

• BIT is a reciprocal agreement for according protection to investments by nationals and companies of one State in another State.
• India approved new Model BIT text in 2015, which replaced Indian Model BIT, 1993.
  • Since then, Model text 2015 is used for (re)negotiations of BITs and investment chapters of FTAs/ Economic Partnership Agreements.
• Key Features of Model BIT 
  • National Treatment: Similar treatment as domestic investors. 
  • Protection from expropriation: Limiting each country’s ability to take over foreign investments in its territory.
  • Settlement of Disputes: Exhaust local remedies before commencing international arbitration.
  • Other: Enterprise based definition of investments.

What are the Key Highlights of the Session?

• Minister Highlighted:
  • That there is a need to take the relationship forward in newer areas like technology, digital payment solutions, and investment in start-ups.
  • The need for an integrated approach for regional connectivity and cooperation.
  • Further, there are seven emerging areas of cooperation between both nations namely Digital Payments, Space Cooperation, Agri and Dairy, Pharma, Gems and Jewellery, MSME, and Inter-regional cooperation.

How has been India-Uzbekistan Relations?

• About:
  • India and Uzbekistan have a long history of cooperation.
  • After Uzbekistan’s independence, India was one of the first countries to acknowledge its state sovereignty.
  • Bilateral relations now encompass a wider canvas, including political and strategic issues, defense and security, trade and investment, energy, agriculture, S&T, education, and people-to-people ties.
• Initiatives:
  • Defense Cooperation:
    • The first-ever joint military exercise held between India and Uzbekistan was named Dustlik.
      • India has also assisted in setting up an India Room at the Armed Forces Academy of Uzbekistan in Tashkent.

• Multilateral Cooperation: Active cooperation in platforms like UN, G20, BRICS, and SCO.
• Trade Relation of India Uzbekistan: Significant growth in India-Uzbekistan bilateral trade has been observed over the past five years.
• Other Engagements:
  • India-Central Asia framework at the India-Central Asia Summit.
  • India-Central Asia Dialogue at the foreign minister level.
  • Joint Working Group on Afghanistan and the Central Asia Business Council.

India -Uzbekistan Relations
Historical Ties:
– India and Uzbekistan have centuries-old ties dating back to the time of the Silk Road, where cultural, religious, and trade exchanges flourished.
– The shared heritage between the two nations is evident in the cultural and historical similarities, including influences from Persian and Mughal eras.
– India’s relationship with Uzbekistan grew stronger after the latter’s independence following the collapse of the Soviet Union in 1991.
Political Relations:
– Strategic Partnership: India and Uzbekistan elevated their relationship to a Strategic Partnership during Uzbek President Shavkat Mirziyoyev’s visit to India in 2018.
– Regular High-Level Visits: Both countries regularly engage in high-level visits to deepen political, economic, and strategic ties. Indian Prime Minister Narendra Modi and President Mirziyoyev have met on several occasions, underlining the importance of the bilateral partnership.
– Multilateral Engagement: India and Uzbekistan collaborate in various multilateral forums, including the United Nations, Shanghai Cooperation Organisation (SCO), and the India-Central Asia Dialogue.
Economic and Trade Relations:
– Trade: India-Uzbekistan trade has witnessed growth over the years, though the potential remains largely untapped. The main exports from India include pharmaceuticals, machinery, electronic products, and textiles, while Uzbekistan exports items like fruits, fertilizers, and raw materials.
– Bilateral Trade Agreement: Both nations have a Bilateral Investment Treaty (BIT) in place, which protects and promotes investments. They are also working on finalizing a Preferential Trade Agreement (PTA) to enhance trade relations.
– Pharmaceuticals: Indian pharmaceutical companies have a significant presence in Uzbekistan, and there have been ongoing efforts to enhance this partnership further. India supplies about 25% of Uzbekistan’s pharmaceutical needs.Information Technology: Uzbekistan is increasingly seeking India’s expertise in Information Technology and digital governance.
Defense Cooperation:
– Military Exercises: India and Uzbekistan regularly engage in joint military exercises such as DUSTLIK, aimed at enhancing counter-terrorism cooperation.
– Defense Training: India provides military training to Uzbek armed forces through its various institutions, enhancing capacity-building efforts.
– Security Cooperation: Both nations cooperate on counterterrorism, anti-radicalization, and intelligence-sharing, particularly in the context of growing security concerns in Afghanistan and Central Asia.
Cultural Relations:
– Cultural Exchanges: India and Uzbekistan have vibrant cultural exchanges that focus on arts, music, dance, and yoga. Hindi is also widely taught in Uzbekistan, and Bollywood is extremely popular.
– People-to-People Ties: There is growing interest among the Uzbek population in India’s traditional medicine systems like Ayurveda and Yoga. Uzbekistan regularly participates in cultural festivals in India, and vice versa.
Connectivity and Transportation:
– Chabahar Port: India, Uzbekistan, and Iran are working on utilizing Chabahar Port to enhance connectivity with Afghanistan and Central Asia, bypassing Pakistan. This would open up opportunities for trade and economic engagement between India and Uzbekistan.
– International North-South Transport Corridor (INSTC): Uzbekistan has shown interest in the INSTC, a project that aims to reduce the time and cost of transporting goods between India and Central Asia.
Energy and Renewable Resources:
– Energy Cooperation: Uzbekistan is rich in natural resources, and India has expressed interest in developing energy partnerships in areas like natural gas and renewable energy.
– Nuclear Cooperation: Both countries signed a civil nuclear cooperation agreement for peaceful purposes, focusing on the exchange of knowledge and technology in nuclear energy.
India’s Developmental Assistance:
– Lines of Credit: India has extended various lines of credit to Uzbekistan to help fund infrastructure projects like road construction, water treatment plants, and renewable energy projects.
– Capacity Building Programs: Through the Indian Technical and Economic Cooperation (ITEC) program, India provides training and capacity-building assistance to Uzbek professionals in various sectors, such as health, agriculture, and IT.
Challenges
– Geopolitical Concerns: Afghanistan’s instability remains a concern for both India and Uzbekistan, particularly after the Taliban takeover. Both nations are working to address common security challenges.
– Trade Barriers: Despite the growing relationship, bilateral trade remains below potential due to connectivity issues, regulatory barriers, and lack of direct transportation links.
Recent Developments
– India-Central Asia Summit: India hosted the India-Central Asia Summit in January 2022, where both nations reiterated their commitment to strengthen ties, especially in trade, security, and energy sectors.
– Afghanistan Issue: India and Uzbekistan have expressed common concerns over terrorism emanating from Afghanistan and the importance of ensuring that Afghan territory is not used for terrorism.

CBL Practice Questions for Prelims

What is the primary purpose of the Bilateral Investment Treaty (BIT) signed between India and Uzbekistan?

• A) To promote military cooperation
• B) To facilitate cultural exchange
• C) To protect and promote investments
• D) To establish a trade bloc

Answer: C) To protect and promote investments

CBL Mains Practice Question

Analyze the significance of the Bilateral Investment Treaty (BIT) between India and Uzbekistan in the context of India’s foreign policy objectives in Central Asia.

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