Prime Minister Narendra Modi announced Sunday that the contentious retrospective tax, which set off a scare among foreign investors after it was introduced in 2012 by the then UPA government, was “a matter of past”, and “a chapter (that) will not be opened again”.
Addressing business leaders of France and India in the presence of French President Francois Hollande who arrived in Chandigarh ahead of his visit to New Delhi where he will be the guest at the Republic Day parade, Modi said his government will ensure that foreign investors are clear about tax systems that will prevail in India over the next 15 years.
“Retrospective tax is a matter of past. That chapter will not be opened again. We are ensuring that neither this government nor future governments can open this chapter,” Modi told the business summit.
He said his government was working towards a stable and predictive taxation system in the country. “Whosoever makes investment in the country should know about the taxation system in the country over the next five years, 10 years, 15 years,” he said.
Modi also played up the natural partners theme, saying India and France are “made for each other”. He said France had the resources, while India had the need.
“It is like ‘made for each other’. What you (France) have is our requirement and what you need is the market which we have,” he said. In addition, India offered a low cost manufacturing destination with an abundance of skilled manpower.
French companies already doing business in India have had positive experiences, the Prime Minister said. He invited French companies to make in India, especially those in the defence sector.
“India wants to enter the field of defence manufacturing… I assure French companies present here, especially in the field of defence manufacturing, that we can do a lot in the area of defence manufacturing.”
India had seen a 40 per cent increase in foreign direct investments and established itself as an important destination for foreign capital, he said, pointing out that the country’s ‘Ease of Doing Business’ ranking had improved by 12 points after his government took over.
“The inflow of 40% FDI in short period of time is proof that the world has recognises India as an important destination.”
He said the two countries could also partner each other in the field of innovation. “We are working towards improving quality of life. We are working on good governance. These are the two initiatives that the world is attracted towards,” Modi said. “Ultimately, good governance is the essence of our efforts,” the PM said, adding that his government was working towards delivering results as per global benchmarks.
Hollande said that there were many sectors in which France could help India make progress and these included rail transport, maritime transport, Information Technology, space and defence. He said his country would be pushing for investments worth $1 billion per year.
Referring to the Chinese growth of 9 per cent per year, he said the level of growth of Chinese economy has slowed down.
“There can be many reasons for this. India is an economy which is growing fast and France wants to invest in India. We will be pushing investments worth one billion US dollars per year,” he said. He also offered help to manage the rapid growth of urban India.
Praising Hollande for his efforts on climate control, Modi said this was one of the issues in which bilateral closeness had come to the fore since the French President had informed him in advance about certain decisions on the issue even before he made them public.
Hollande said that the Prime Minister made significant contributions to the climate change talks in Paris. But he sounding a warning on the rapidly rising level of pollution in cities, saying there was no time to be wasted to implement measures to control global warming.
The two sides signed 16 MoUs in the presence of Modi and Hollande.
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