Retrospective Taxation and GAAR Provisions ward-off European Investors from India says Dr. Cravinho
“The Indian economy is regarded as a rapidly growing power house. However, the economy is sparse with regard to funds. The European Union can make a useful contribution to help India with its capital requirements. Also, the Free Trade Agreement (FTA) between the nations in its finalization stages is expected to generate trade opportunities and investor friendly climate between the nations But issues such as retrospective taxation and GAAR compliance play hindrance.”, said H. E. Dr. Joao Cravinho, Ambassador of the European Union to India during an interactive meeting organised by All India Association of Industries and MVIRDC World Trade Centre.
Foreign investments are a measure of confidence in a country and crucial for GDP growth. Europe can play a central role in helping the Indian economy grow. Over the years, the EU has been by far the largest investor and trading partner of India with FDI inflows worth $ 13.15 billion during 2011-12. But during 2012-13 the inflows dropped to $ 4.93 billion. The decrease in the FDI inflows has been led by widespread opposition in the form of retrospective taxation, GAAR provisions along with overall bleak macroeconomic prospects. The European business community awaits the formation of the new government for clear provisions of investing in the Indian economy. However, limited FDI provisions and restrictions on joint ventures need to be done away said Dr. Cravinho echoing the views of the European business community.
Elaborating on prospective sectors for EU’s investment in India Dr. Cravinho said that India plans to invest US$ 1 trillion in its infrastructural sector. Indian banks being highly leveraged are not in a position to invest. India may look upto the EU for these investments. Secondly, European FDI may flow into technology transfer, know-how and experience as well.
Further, Dr. Cravinho appreciated the role of MVIRDC World Trade Centre and All India Association of Industries in outlining avenues for European investments in India through seminars, conferences and interactive meetings.
Lastly, Dr. Cravinho said that the European Union awaits the election results of the Indian economy. It is felt that India requires a proactive government which will aid rural and urban growth, manufacturing, create employment and a conducive economic environment. The Union has no bias towards any Indian political party and will work in harmony with the Narendra Modi government as well. Also, the European Union respects the judiciary system of India.
Earlier, in his welcome remarks Mr. Vijay Kalantri, President, All India Association of Industries andVice-Chairman, MVIRDC World Trade Centre said that the European Union is a prominent trading partner of India with India’s Export to European Union worth US $ 50.42 billion and India’s imports from the European Union worth US $ 52.27 billion. Trade in services amongst the countries stands at € 22.2 billion. Also, the EU is also one of the largest sources of Foreign Direct Investment for India. FDI inflows from the EU into India increased from €3.5 billion in 2009 to €7.5 billion in 2010 and €14.19 billion in 2011. Major Exports from India to European Union are mineral fuels, precious & semi precious stones, appeals & clothing, iron & steel, footwear, plastic articles, coffee, tea, spices etc. Major imports by India from the European Union are natural or cultural pear, precious & semi precious stones, nuclear reactor, boilers, machinery, electrical machinery & equipments, iron & steel, organic chemical, plastic & articles, etc.
The rapidly growing Indian economy provides a land of opportunities in the sectors of infrastructure, manufacturing, logistics, etc. However, the economy needs to initiate investor friendly policies in the form of tax holidays, proactive and transparent bureaucratic policies, permission to form joint ventures, etc. The European Union has an advantage in the form of physical proximity in comparison to the USA and Australia, Mr. Kalantri added.
Ms. Rupa Naik, Executive Director, All India Association of Industries and Director-Projects, MVIRDC World Trade Centre proposed the vote of thanks. Ms. Naik enlightened the audience about the All India Association of Industries and MVIRDC World Trade Centre proposal to initiate a European Union desk to facilitate business between India and the EU.
The meeting was well attended by Consulates, the business fraternity, corporates and professionals.
May 9, 2014
Mr. Vijay Kalantri, President, All India Association of Industries and Vice Chairman, MVIRDC World Trade Centre addressing the audience during an interactive meeting organized by All India Association of Industries (AIAI) and MVIRDC World Trade Centre (MVIRDC WTC) with H.E. Dr. Joao Cravinho, Ambassador of the European Union to India. Others looking (L-R): H.E. Dr. Joao Cravinho, Ambassador of the European Union to India, Ms. Rupa Naik, Executive Director, All India Association of Industries and Director- Projects, MVIRDC World Trade Centre.
From (L-R) : Mr. Vijay Kalantri, President, All India Association of Industries and Vice Chairman, MVIRDC World Trade Centre , H.E. Dr. Joao Cravinho, Ambassador of the European Union to India, Ms. Rupa Naik, Executive Director, All India Association of Industries and Director- Projects, MVIRDC World Trade Centre during an interactive meeting organized by MVIRDC World Trade Centre (MVIRDC WTC) and All India Association of Industries (AIAI) with the Ambassador.
