On Tuesday, the new law and telecom minister hinted that his government may avoid retrospective taxation and provide stable policies so that there are no qualms for foreign investors.
The comment offers a glimmer of hope on sorting out the long drawn tax dispute with British mobile operator Vodafone.
Ravi Shankar Prasad told reporters on assuming charge of the law ministry at Shastri Bhavan that, “Retrospectivity in law should normally be avoided, as it is very evident that India needs foreign investment.”
He did not name any company in this context, refusing to speak on “individual cases”.
In 2012, the Indian government amended its tax code retrospectively to reopen an Rs 11,000-crore tax liability dispute with Vodafone, regardless of the Supreme Court having ruled in favour of the telecom company earlier.
This move invited worldwide criticism and hurt India’s image as an investment destination. An attempt at conciliation has also failed.
The 59-year-old minister also promised a “stable fiscal, taxation and policy regime” so that foreign investors do not face any problems in India. Simultaneously, corruption would not be tolerated, he said. “The statutory regime will be fair, transparent and non-discriminatory.”
Prasad, who will hold the portfolio a second time in his political career, assured quick steps to ensure greater access to justice.
“It will be a priority area. More courts, more infrastructure, more judges, creating an enabling atmosphere for accessing justice. Good governance means a good legal access to justice,” he said.
According to the minister, Arbitration is another key priority for the Narendra Modi-led government. “India should become a hub of international arbitration,” Prasad said.
Presently, Singapore and London are the most preferred arbitration hubs of the corporate world.