Cairn Demand - global investors worry about risks of investing in India - UKIBC
COMMENTING on India UK relations and the FM's visit to London last week, the UK India Business Council said,
However, while it is a strong and positive relationship, it is not without challenges.
Both, Cairn Energy and its India-based former subsidiary Cairn India received retrospective tax bills of USD 1.6 USD billion and USD 3.2bn respectively last week.
This came at a time when the Indian Government has been publicly talking about the negative impact of retrospective taxation on investor sentiment towards India.
Cairn Energy, of course, has invested USD 5bn in India over the last twenty years, creating jobs and energy in Rajasthan, and enabling thousands of Indian investors to take a stake in Cairn India.
Minister Jaitley claimed that these actions were "legacy matters" and did not contradict statements by NDA minister's new retrospective tax demands and, moreover, that investor sentiment should not be affected by these demands.
What is undoubtedly true is the tax department's actions have not only damaged Cairns employees and shareholders, but have caused many global investors to worry about the risks of investing in India.
While we welcome the decision of the Indian Government not to challenge the recent rulings in favour of Shell and Vodafone in the Mumbai High Court, UK India Business Council continues to believe that the most effective resolution of all these matters is by a repeal of the 2012 amendment.