oppn parties Making APA Bilateral Would Speed Up Investments From US

News Snippets

  • Trouble brews in Bihar JD(U)-BJP alliance as Bihar police asks special branch officers to keep tabs on RSS activities
  • Trust vote in Karnataka assembly today. With rebel MLAs deciding to stay away after the SC order, the Congress-JD(S) government is likely to fall as it does not have the numbers
  • Amit Shah says the government will identify and deport illegal immigrants from all parts of the country
  • Reports from Pakistan confirm that Hafiz Saeed has been arrested and sent to jail
  • After the SC order, Karnataka Speaker says he will go by the Constitution in deciding on the resignations of the 16 MLAs
  • Rebel MLAs say they will not attend the trust vote on Thursday
  • Supreme Court rules that rebel MLAs cannot be forced to attend the assembly and vote in the floor test
  • Both the Centre and the Assam government have sought re-verification of up to 20% of draft NRC data
  • Pakistan opens its airspace for Indian planes
  • Dilapidated building collapses in Mumbai, killing more than 10 people while many were still trapped
  • Kulbhushan Jadhav case verdict to be delivered today by the ICJ
  • A Vistara flight landed in Lucknow with just 5 to 10 minutes of fuel left in the tank
  • Supreme Court to decide on Karnataka MLAs plea today
  • Karnataka alliance to face floor test on Thursday
  • China says that the next Dalai Lama will be appointed by it
International Court of Justice agrees with India, stays Kulbhushan Jadhav's execution. It asks Pakistan to allow consular access to the accused.
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.