India is currently the “most attractive” investment destination,London-based industrialist Lord Swraj Paul said today,underlining that retrospective amendment of laws to bring into the tax net Vodafone-type deals will not have any long-term negative impact.
“India at the moment is perhaps the most attractive country for investment… Whenever anything like this happens,people make lot of noise,” Lord Paul said when asked whether the controversy over the proposed amendment of the Income Tax Act from retrospective effect would affect investor confidence.
Paul said the investment decisions are not made only by the taxation issues.
“People see the whole package. Is it a friendly country to invest?” he said,however,adding that it may have some impact in the short-run.
The government proposes to amend the Income Tax Act with retrospective effect. The move followed the Supreme Court ruling in favour of British telecom major Vodafone in the Rs 11,000 crore tax dispute arising out of its acquisition of 67 per cent stake in Hutch Essar from Hong Kong-based Hutchison Telecom.
Several global industry bodies have supported Vodafone and written to Prime Minister Manmohan Singh. During his recent visit to India,UK Chancellor for Exchequer George Osborne also raised the issue with Finance Minister Pranab Mukherjee.
Lord Paul,who is on a India visit,said Britain had also made similar changes. “The first time the retrospective tax case came up was in Britain… nobody (investor) holds money. This tax is not the only thing which affects…”.
Lord Paul said more than the taxation issue,corruption and scams are more damaging and slowing down policy reforms as the government “is busy sorting out these scams…”
Putting the onus on the industry as well for the scams,Lord Paul said: “Let the business also take the responsibility… This is the responsibility of all people… How can the giver and taker be absolved?”
He reiterated that corruption was not unique to India. In a way the global financial crisis of 2008-09 was also a result of lack of transparency in the banking sector.
Lord Paul said: “(but) India is having too many at the same time… We have to be more transparent.”
Asked about his comments on this year’s Budget,he said the Finance Minister has done whatever he could,under the difficult circumstances.
“The reason I praised (the Budget) is because Indian economic situation was bad and unless it was a tough Budget,there was no way of solving…,” he said.
“From my point of view,under the circumstances he (Mukherjee) has done a good Budget that will solve problems of the country in the longer term,” Lord Paul said.
Mukherjee’s Budget for 2012-13 had proposed to mop up an additional Rs 41,440 crore through increase in excise duties and hike in service tax.
The tax mop-up measures had come in for criticism from a wide section of the industry.
On the European sovereign debt crisis,the Caparo Group Chairman and Founder said: “Countries were living beyond their means… Lot of countries are in debt that is why the US economy is in difficulty. British economy,European economy are in difficulty.”