India doesn't plan huge changes to dispute resolution with foreign companies, source says

NEW DELHI, Sept 25 : India is not planning to make major changes to how disputes with foreign businesses are resolved, according to a source with direct knowledge of the government's review of bilateral investment treaties.

Foreign companies operating in India have long complained that dispute resolution in Asia's third-largest economy is time-consuming, difficult and a huge impediment to investing further.

In particular, India requires that disputes involving foreign companies first be heard in local courts for five years before international arbitration is allowed.

The requirement that local remedies must first be pursued will be kept, said the source.

A second source said, however, that the five-year time period will be shortened, possibly to two years.

The government will also keep taxation disputes outside the scope of investment treaties and will not compromise on its sovereign right to tax, the first source said, calling the issue a "red line" for India.

Both sources, who work for the government, declined to be identified as the details were confidential.

A spokesperson for the federal finance ministry did not respond to a request for comment.