India's U-turn on retrospective tax: Cairn Energy remains cautious

Scottish oil company Cairn Energy Plc, which waited for almost seven years for this day, is now playing cautious on the government move to do away with the retrospective tax.

Sources close to the company told BusinessLine that “we would like to discuss with the government first and respect the process of the Bill passing through Parliament.”

Both the Indian government and Cairn have been maintaining that they have been in talks to reach an amicable solution. While neither was willing to share the details, sources said that a workable solution was being proposed. Now, it remains to be seen what will be on offer for Cairn and how much will it be willing to accept.

Cairn has been fighting a bitter battle with the Indian government. A French court had ordered freezing of certain Indian government properties after Cairn Energy filed a case saying that it was not paying up the award given by The Hague-based Arbitral tribunal on December 21, 2020. According to the award, India is to pay Cairn $1232.8 million plus interest and $22.38 million towards arbitration and legal costs. India has filed an appeal.

Vodafone sees no impact

In the case of the withdrawal of retrospective tax on Vodafone Plc, the move is unlikely to have any impact on Vodafone Idea. Vodafone, which has already written off its India investments, has stated that it won't make any new investments into the India joint venture. A Vodafone spokesperson declined to comment.

“Vodafone Plc has always kept the tax dispute separate from the India operations even when it was thriving. It is unlikely that the company will change its position on India. The respite is only a matter of book adjustments for Vodafone,” said a source.

(inputs from Mumbai Bureau)

COMMENT NOW