The Hindu Business Line : Stake sale in Vodafone Essar deferred

NEW DELHI: The Government has deferred the proposals of Mr Analjit Singh and Mr Asim Ghosh to part-sell their minority stakes in Vodafone Essar as the Finance Ministry apprehends that the move is aimed at “treaty shopping’’, or tax avoidance.

The Department of Revenue did not support their proposals on the ground of “treaty shopping’’, while the Telecom Ministry has requested for deferment.

The Department of Economic Affairs (DEA) has also sought deferment seeking detailed documentation, highly placed sources told PTI.

In the Indian context, treaty shopping refers to cases where investors use the Mauritius route to bring in investments to the country, taking advantage of double tax avoidance treaty between the two countries.

DEA also said it needed to analyse whether all documents are in compliance with the new foreign investment guidelines as embodied in Press notes 2, 3, 4 issued earlier this year.

The Foreign Investment Promotion Board (FIPB), which clears all FDI proposals, has asked the Commerce Ministry and DoT to give a “reasoned recommendation’’ rather than just a “no objection’’.

Both the parties have said that the proposals would entail FDI inflow of Rs 533 crore through Mr Analjit Singh’s Scorpio Beverages and Rs 330 crore through AG Mercantile owned by former Vodafone Essar Managing Director Mr Asim Ghosh.

Mr Singh and Mr Ghosh had sought to sell 49 per cent each of their holdings in two investment companies that indirectly own stakes in Vodafone Essar. — PTI

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