Saturday 26 September 2020

Government of India 's Smart Move

The verdict on Vodafone Group, regarding retrospective tax, is a indirect life saver for telecom industry in India. The stakes involved was Rs.22,000 crores.

Verdict in favor of India could have reduced Indian Telecom Industry into Duopoly with clear winning position for Reliance. 

It seems Indian Government did not accept that stance as it will give a very high upper hand for Reliance Industry over Indian economy.

In AGR case, Supreme Court of India, already gave its verdict that Vodafone and other parties can't escape the AGR dues. Efforts by Government of India to save the sector was rejected by the Supreme court.

It seems to protect or give reprieve to Vodafone Idea in the Indian Telecom sector, it was a must for Vodafone to win.

Confirming the ruling in favour of the company, Vodafone Plc in a statement to FE said, “Vodafone confirms that the investment treaty tribunal found in Vodafone’s favour. This was a unanimous decision, including India’s appointed arbitrator Rodrigo Oreamuno. The tribunal held that any attempt by India to enforce the tax demand would be a violation of India’s international law obligations.”.

The unanimous decision with Indian appointed arbitrator Rodrigo Oreamuno, is a indicator that Government of India wanted Vodafone to be a winner in this case.

This is a win win situation for all  ‐

  1. Retrospective tax ghost is buried
  2. Vodafone group and other foreign investors got a positive message
  3. Indian Government indirectly protected telecom sector from reducing it to Duopoly
  4. Reliance Industry will not complain that Indian Government protected Vodafone Idea

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