Thursday, February 18, 2021

Can we volunteer to get eradicated?

"While laudable, India's FDI (foreign direct investment) levels still lag the high water marks of other developing economies such as China, Brazil and Russia," wrote Richard M Rossow. For the first time, India attracted $63 billion FDI in the twelve months to November 2020, $14 billion of which went to Reliance Jio alone. "One critical factor to attract major investments from the largest multinationals is to have a 'plug and play ecosystem' of their trusted global suppliers. These smaller firms are more risk averse than their larger partners," and are hesitant as "the government regularly increases customs duties and expands local production rules". Then there are Vodafone and Cairn Energy, both of which have won international arbitration cases against the Indian government's retrospective tax demands. However, the cases are completely different. The government is demanding Rs 200 billion in back taxes from Vodafone for its acquisition of Hutchison Essar for $11.1 billion in 2007. Although it has lost its case in the Indian Supreme Court as well as at international arbitration it has appealed to the Singapore tribunal. In 2006, Cairn Energy transferred ownership of its Indian oilfield to Cairn India Ltd. "At the time, no tax was demanded. Years, later, when Cairn disputed the sudden $4.3 billion levy, New Delhi expropriated its shares in Vedanta Ltd (into which Cairn had merged its Rajasthan oilfield), helped itself to the dividends and dumped the stock," wrote Andy Mukherjee. The International Tribunal at the Hague ordered the Indian government to pay $1.4 billion in compensation, including penalty and interest. The government has no intention of paying anything to Cairn because it claims its right to levy any tax it wants as a sovereign of India, reminding us of the taxes the British sovereign extracted from us. Instead, it wants Cairn and Vodafone to adopt the 'Vivaad se Vishwas' scheme, under which they will pay all the tax demanded but the government will forgive interest and penalties. Either we are missing something or this is a collective delusion of grandeur, breathtaking in its arrogance. "At risk of seizure are Indian assets such as airplanes, bank accounts and other foreign properties that could be snatched to pay for the arbitration award." Maybe, that is the plan. Let Cairn take Air India planes, quietly transferring ownership of the airline to Cairn before it realises that it has been landed with a debt of Rs 600 billion. Brilliant. The government owes Rs 5 billion to Air India for VVIP flights. Why should foreigners invest in India when 5,000 dollar millionaire citizens fled India in 2018, and high networth individuals (HNI) are looking to invest in countries which grant residency status or citizenship in exchange. Over 80% of Indians living in the US intend to apply for citizenship, wrote Badrinathan, Kapur and Vaishnav. Those born in the US of Indian parents have little connection with this country. 85,593 Indians became permanent residents of Canada in 2019 and 32 million of Indian origin are living abroad and will do anything not to have to return. For those of us stuck in India we have to prostrate ourselves to our Sovereign or risk getting eradicated. Some of us would like to volunteer.           

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