The Indian Budget has received a positive response from the UK-based Indian business community but the issue of retrospective taxation was flagged as a concern by them.
‘India Budget Analysis A Briefing for the UK Business Community’ brought together experts for a panel discussion at India House in collaboration with the Confederation of Indian Industry (CII) last evening.
Many felt the Indian government, through the budget, should have taken a more categorical stand on pending taxation issues involving British firms such as Vodafone and Cairn.
“Retrospective tax was something that we were expecting would be fully addressed but it has not been fully addressed. It really needs to be addressed,” said Prashant Jhawar, chairman of Usha Martin, and chairman of CII India Business Forum UK.
His views were echoed by Anuj Chande, partner and head of South Asia Group at Grant Thornton, who also felt the business community would have liked “more on the retrospective tax issue”.
Cairn Energy is facing a tax demand of Rs 10,247 crore on a 2006 business reorganisation of its India unit and Vodafone faces a tax liability over its USD 11 billion acquisition of 67 per cent stake in the mobile-phone business owned by Hutchison Whampoa in 2007.
Finance minister Arun Jaitley had announced in his Budget statement earlier this week that firms affected by the retrospective amendment would have the opportunity of a one-time scheme of dispute resolution.
However, the panel did not believe this adequately addressed the issue.
Deepak Lalwani, chairman of London-based consultancy Lalcap, said: “Overall a positive Budget where fiscal discipline has been stuck to. But among the things that have not been addressed adequately is that of retrospective tax”.
“Tax issues involving Vodafone and Cairn still overhang these need to be addressed to make other investors more comfortable,” he said.
Ibukun Adebayo, co-head emerging markets at London Stock Exchange, who moderated the panel discussion concluded the analysis with a “final score-card” of seven and a half out of 10 for the Budget overall, which he described as “encouraging” for keeping to the course of “systemic reforms” in India.
“The Budget is one of the most important events that is really looked forward to. The idea behind this discussion was that if we talk about these things, we will generate larger interest in the Indian economy as well as the India-UK economic partnership,” said Indian high commissioner to the UK Navtej Sarna.
The general consensus at the event, also involving Philip Bouverat, director at JCB, and John Copley, senior vice-president at Rolls Royce, was that it was a balanced Budget with positives on fiscal discipline, infrastructure and rural development.