oppn parties Making APA Bilateral Would Speed Up Investments From US

News Snippets

  • The Army conducts an operational alert exercise in eastern Ladakh
  • The IAF reopened the Vijaynagar advance landing ground, an airstrip in Arunachal Pradesh near the Chinese border
  • Amit Shah says he never sought to impose Hindi
  • Government bans the manufacture and sale of e-cigarettes in India
  • Mamata Banerjee seeks an appointment with Home Minister Amit Shah today
  • Bengal CM Mamata Banerjee meets PM Modi in what she later described as a government-to-government meeting
  • Supreme Court sets a deadline of October 18 for completing the hearings in the Ayodhya case
  • Pakistan rejects India's request for use of its airspace when PM Modi flies to the US later this week
  • Crude prices fall sharply as Saudi Arabia assures normal production in a few weeks. Prices fall by 5.4% to $65.30 per barrel
  • Sensex tumbles 700 points over fears that rising crude prices will deal a body blow to the tottering Indian economy
  • As Rajeev Kumar fails to appear before the CBI despite several notices, the agency forms a special team to locate and apprehend him
  • S Jaishankar says Pakistan is not a normal neighbour and its behaviour is a "set of aberrations"
  • External Affairs Minister S Jaishankar says PoK in Indian territory and the country hopes to have physical jurisdiction over it one day
  • Barasat Sessions court near Kolkata rejects Rajeev Kumar anticipatory bail application citing lack of jurisdiction as the reason
  • PM Modi celebrates his birthday with Narmada aarti and later has lunch with his mother.
Sunni Wakf Board and Nirvani Akhara write to the Supreme Court for a negotiated settlement to the Ayodhya dispute
oppn parties
Making APA Bilateral Would Speed Up Investments From US

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.
Overseas investments to India, especially from the USA, will receive a huge fillip as India and the USA have signed an agreement that makes APAâ€â"¢s bilateral. APAâ€â"¢s are advance pricing agreements that allow companies to know their tax liabilities in advance in case of transfer pricing on key transactions. India received nearly 400 applications on this account, of which more than 150 were from US companies.

Ever since the Vodafone case and the retrospective amendment of IT Act, foreign companies have been wary of investing in India as they fear that they would be taxed heavily despite existing laws. They feel that the government, when faced with tax loss as per existing laws, would insert a clause with retrospective effect and queer the pitch for them. Through APAâ€â"¢s, the companies are at least certain about the tax consequences of their transactions well in advance and do cost and budgetary planning and judge the consequences of their transactions accordingly.

Although India had signed APAâ€â"¢s, they were largely unilateral as the tax authorities in the USA had not been made a party. This worried the US companies as again, they were not sure of the tax credits that would be allowed to them in the US. With tax authorities of both countries now coming on the same page, a major drawback to investment by US companies has been removed.

The APA agreement, along with the fact that the nuclear liability insurance fund has been suitably altered and 49% FDI has been allowed in the defence sector, would speed up the investments in the nuclear reactor sector and defence production sector. This will be a huge plus, both for the investment climate and Indo-US ties. For long, being a huge buyer of US defence equipment, Pakistan had received support from the extremely strong defence equipment producers lobby in the US. Hence, US always tilted towards Pakistan. But with the new emphasis on defence production in India, this equation will change and there will be a level playing field.