oppn parties Making APA Bilateral Would Speed Up Investments From US

News Snippets

  • Supreme Court holds hotels liable for theft of vehicle from their parking area if parked by valet, says "owner's risk" clause is not a shield from such liability
  • Finance Minister says she is receiving feedback from many sectors that recovery is happening as there is lower stress
  • Sabarimala temple opens, but police bar the entry of women below 50 years
  • Finance Minister Nirmala Sitharaman says Air India and BPCL to be sold off by March
  • Media person Rajat Sharma resigns as DDCA president
  • Shiv Sena, NCP and Congress postpone meeting the governor of Maharashtra
  • Shiv Sena not to attend the NDA meeting on 17th November, says break up "a formality"
  • Shiv Sena says that the confidence the BJP is showing about forming the government in Maharashtra is based purely on its expectation of getting numbers through horse trading
  • Anil Ambani resigns as director of the bankrupt Reliance Communications
  • India beat Bangladesh by an innings and 150 rums inside three days in the first Test. Indian pacers excel after Mayank Agarwal's double century
  • Sena-NCP-Congress work out a common minimum programme, will form the government soon and it will last 5 years, says Sharad Pawar
  • Income Tax Appellate Tribunal upholds the decision to withdraw the charitable status of Young India, making it liable to pay Rs 145 in income tax. Rahul Gandhi and Priyanka Vadra are the majority shareholders in the company
  • CBI raids offices of Amnesty International across India
  • Supreme Court quashes NCLAT order against Arcelor Mittal and paves the way for the company to take over ailing Essar Steel
  • Finance Minister Nirmala Sitharaman says concerns of telcos will be addressed and no company will close down
Two Muslim litigants in Ayodhya refuse to accept the Supreme Court order, say review petition might be filed
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.