FDI inflows could be hit if tax laws are ambiguous: Ruia

Leading industrialist and Essar Group Chairman Shashi Ruia has warned of an adverse impact on FDI inflows in India if its taxation laws remain "ambiguous".

"The Government (of India) is signing a spate of treaties with other countries. But all this will come to nought if the treaties are ambiguous and open for departmental interpretation," he said during an address at the Indo- American Chamber of Commerce here late last evening.

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Incidents of tax claims by authorities will lead to litigation by companies which will have a "negative impact" on foreign direct investment (FDI) flows into India, he added.

"We need an upgradation in our taxation policies...you will ask why this person is bringing this up today. I paid up to USD 1 billion in tax and it is not a good feeling...not a very happy occasion."

Ruia was speaking hours after UK-based Vodafone agreed to pay USD 400 million more to its Indian partner Essar for buying its 33% stake in the joint venture Vodafone- Essar. With this, Essar closed the deal to sell its 33% stake at USD 5.46 billion as against USD 5 billion decided earlier.

Essar had held 22% stake in the joint venture through its Mauritian arm and the remaining 11% through an Indian subsidiary.

Under the agreement, Vodafone has made a net payment of USD 3.32 billion for the 22 per cen stake after deduction of withholding tax of USD 0.88 billion.

Ruia has warned of an adverse impact on FDI inflows in India if its taxation laws with various countries remain "ambiguous".

"The Government (of India) is signing a spate of treaties with other countries. But all this will come to nought if the treaties are ambiguous and open for departmental interpretation," he said during an address at the Indo- American Chamber of Commerce here late last evening.

Incidents of tax claims by authorities will lead to litigation by companies which will have a "negative impact" on foreign direct investment (FDI) flows into India, he added.

"We need an upgradation in our taxation policies...you will ask why this person is bringing this up today. I paid up to USD 1 billion in tax and it is not a good feeling...not a very happy occasion."