India needs to resolve tax issues with MNCs: Gammell

Tags: News
India's new government needs to resolve taxation issues dogging multinational companies if it wants to encourage foreign direct investment, said Bill Gammell, who retired last week as chairman of Cairn Energy.

"I think it is recognised that India needs to consider being more investor-friendly from an international perspective," he said.

Speaking after Narendra Modi-led BJP swept to power in the general election last week, he told The Telegraph: "We are just one of a number of companies including Vodafone, SABMiller, IBM and Nokia who have outstanding tax questions there.

"I would very much hope that one of the first things the new government sorts out is that they look at the whole retrospective tax legislation and the impact it is having on foreign investment."

Cairn bought drilling rights in Rajasthan, which Shell had failed to exploit, for a mere $7.25 million in 2002.

After it found oil, it sold a controlling interest to Vedanta Resources for $8.5 billion nine years later.

Cairn Energy now has only a 10 per cent stake remaining in Cairn India valued at about $1 billion.

It would like to sell this but is being blocked by a retrospective tax notice that was issued at the beginning of this year.

The notice declared that the stake cannot be sold until India’s tax authorities assess whether tax is due from seven years ago.

The saga has led to a slump in the shares of Cairn in January from more than 260p to Friday’s close of 181p, reducing the company’s market capitalisation to 1 billion pound, but Gammell is hopeful that India’s new government will resolve the situation.

Gammell, who stepped down as chief executive in 2011, said the Indian issue was his biggest regret from his time at the company.

Cairn, which Gammell co-founded in 1981 and floated on the London Stock Exchange in 1989, has handed back $4.5 billion to shareholders over the last five years.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Child abuse needs to be tackled with the seriousness it deserves

    The Bangalore rape case has again brought into focus an issue we Indians forever shy away from facing up to — child sexual abuse.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Varun Dutt

<b>Riskfactor</b>: THE BASE RATE BIAS

Base rate fallacy, also called base rate neglect or base ...

Parvez Imam

Revisiting history can do us all good

We often think that we understand history. We read it ...

Bubbles Sabharwal

Your happiness doesn’t depend on your needs

They are two different words (and even worlds) altogether: having ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture