British PM David Cameron talks tough as deals fail to take off
With British companies Vodafone and Cairn facing regulatory hurdles, UK Prime Minister David Cameron has expressed concern over unpredictable decisions and “transparency in the business environment” in the country. Anupama Airy and Gaurav Choudhury report. PM's concernsdelhi Updated: Mar 07, 2011 02:16 IST
"Some UK companies still face difficulties, in particular linked to the predictability and transparency of the business environment in India," Cameron wrote to Prime Minister Manmohan Singh in a February 9 letter, a copy of which is with the Hindustan Times.
HT on February 18 wrote about this diplomatic intervention aimed at ensuring British business interests were protected in the big economy poised to be the world’s fastest growing. Saying Britain wanted to encourage a growing appetite among its companies to invest in India, Cameron said the difficulties UK firms were facing “risk jeopardising our joint goal of a much stronger trade relationship”, valued at $10.6 bn (R47,700 crore).
"This is not to comment on the merits of individual Indian policies, which are, of course, a matter for you," he wrote. "But I want to highlight my concern that some UK companies are facing difficulties which are hard to explain and that this is, in turn, affecting the wider business climate."
Cameron cited three cases in his letter including a tax demand of $2.6bn or R11,700 crore in the case of Vodafone, which he said "remains, pending a satisfactory outcome to the judicial process, subject to a substantial demand for capital gains tax on a basis which has no precedent".
He also highlighted delays in the government's approval for Cairn Energy's $9.6bn (R43,200 crore) deal involving the sale of its Indian subsidiary to the London-listed Vedanta Resources. "Cairn Energy faces unexpected regulatory hurdles which are causing delay and could block the deal entirely, which is very time-sensitive, thus preventing Cairn investors from legitimately exiting the market."
Cameron also touched upon unpaid bills (of more than £20m or R150 crore) due to British companies which worked during last year's CWG in Delhi.
"Some companies which did work for the Games have found it difficult to get payment.” This, he said, had “in one or two cases involved delays which have had serious consequences for the financial viability of the companies concerned.”