Retrospective Taxation - Foreign Investors will abandon India?
THE Brisbane Times reported today that foreign investors will abandon India if a proposed law to retrospectively tax deals with Indian companies is passed;
The Paper further reports:
The law is designed to target one company, and one transaction - Vodafone's 2007 purchase of Hutchison Essar Telecom from which the Indian government wants to claim nearly USD 2 billion in capital gains.
But governments and trade groups have asked India's Finance Minister to scrap the tax, saying investment would be diverted from India at a time when the country desperately needs it.
The lustre of India has been dimmed by stymied efforts to liberalise India's economy. India's growth rate, hampered by high interest rates and inflation, as well as weak foreign investment, fell to 6.1 per cent last quarter, the seventh consecutive quarterly slowdown.