RIYADH: Allying fears of global investors over taxation issues, Finance Minister P Chidambaram has said that India offers a stable and non-adversarial tax regime besides a fair and just dispute redressal mechanism.
Chidambaram, who was on a two-day official visit here, said that steps being taken by the Indian government with regard to taxation were in tandem with the international best practices.
“A developing country needs resources, especially tax revenues and I have stated that our policy is stable tax rates, clarity in the laws, a non-adversarial tax administration, and a fair and just dispute redressal mechanism,” he said in an interview to Arab News.
When asked about the apprehensions of investors that new ways were being worked out to get more taxes from them, Chidambaram said he did not see any reason for such concerns.
The Minister, however, added that in certain aspects the steps taken by India with regard to taxation mirror the concerns being actively discussed by the Organisation for Economic Co-operation and Development (OECD).
Global investors had expressed concern over the decision of the Indian government to set aside the judgement of Supreme Court in the Vodafone case through a retrospective amendment to the tax laws. The governent, however, is trying to find a solution to the vexed tax issue.
The Indian government is trying to revamp the direct and indirect tax regime by replacing the existing laws with the Direct Taxes Code (DTC) and Goods and Services Tax ( GST).
On slowdown in Indian economy, he said that “India today is the third largest economy in terms of GDP on PPP terms.”
India, he further said, benefits greatly from domestic demand from a growing young population and emerging middle class.
“India is host to several global corporate giants; many high-tech global players have set up software development centres in India, and about 306 Fortune 500 companies have established their regional headquarters in India,” said Chidambaram, while referring to the strength of India, which continues to be one of the leading software service providers to the world.
The Minister said the Indian government has taken steps in recent months to enhance growth, and bring more stability to its finances which are beginning to take effect.
The agriculture sector bounced back in 2013 after a drought year, said the Indian minister, while referring to a number of measures that have been taken to stabilise the economy and give greater confidence to the investors.
Asked about the move to allow greater investment into the multi-brand retail sector, Chidambaram said the government has taken steps to make India more attractive for Foreign Direct Investment.
FDI limits have been increased in several sectors, including retail and telecom, and restrictions in the banking sector have been eased, he said, adding “policy in India is clear and that is the reason we have been able to attract consistently strong FDI flows that total USD 309 billion since April 2000.”
The policy on FDI in the retail sector requires initial local sourcing. Many products that will be sold in these multi brand retail stores can be- and in fact are being- produced in India, he added.
Replying to a question on incentives for Saudi investors, he said that some of the investor-friendly decisions by the Indian Cabinet Committee on Investments have already started showing results. “About 287 projects involving investments of about USD 100 billion have already facilitated,” he added.