Tata dispute sends India Inc scrambling to shore up shareholder rights

India is not planning to make significant changes to the dispute resolution process for foreign companies, according to sources familiar with the government's review of bilateral investment treaties. This decision is expected to disappoint overseas investors who had anticipated a major relaxation of rules for resolving conflicts.

Foreign businesses in India's third-largest economy have previously expressed frustration with the lengthy, complex, and challenging process of resolving disputes involving the Indian government or government-set rules. One notable requirement involves local courts hearing disputes involving foreign companies for a period of five years before international arbitration is allowed.

This requirement will remain unchanged, though the five-year time period may be reduced to two years. While some analysts believe investor sentiment may be negatively impacted, the government maintains that taxation disputes will be exempt from investment treaty provisions, serving as a "red line" for India.