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- India & South Asia Political & Social Issues
India Wants Foreigners to Pay
If this Supreme Court ruling in New Delhi holds, you can be sure foreign investment and mergers will go into a deep freeze. I cannot even fathom why their Court would entertain such a unfair decision, which would expose foreign business transactions to retroactive taxes going back to, going back to, going back to....
I call this insanity. It would allow the Indian government to collect taxes dating back to 1962 for any foreign mergers that involved an Indian company. India may need money but this is not the way for a third world country to advance into 2nd place. This bill, if passed, will provide India with $8 billion dollars. Sounds like it will pass based on that item alone.
It was just in January, the same Court indicated to German Vodafone that it did not have to pay taxes of $2 billion in a deal it struck with India's Whampoa cell phone service to merge so the German company could do business in India. Well, I guess it only takes two months for the Indian Supreme Court to reverse itself and now Vodafone faces a $2 billion tab! How can the Court even do this? Who do they answer to?
Other companies like AT&T and others all have mergers in the works because India is a great democracy and place for business but now these companies (that India needs) are putting on the brakes in negotiations to see what the hell is going to happen. Many professionals in India are very unhappy about the government's bill to be voted on because it is a bad message to foreign investors, "you will pay dearly in India".