There is a good chance that Vodafone dispute will be resolved soon, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia has said, underlining that India is a good bet for foreign investment.
"The Vodafone case did not do us any favours. My personal view is that they knew very well that it (Vodafone's purchase of the Indian operations of Hutchinson Whampoa in 2007) was chargeable to tax, but they decided to take a calculated risk.
"The finance minister (P Chidambaram) is in negotiations to come up with a reasonable compromise and there is a good chance we can put this behind us for good," Ahluwalia said on Wednesday while admitting that the $2-billion Vodafone tax dispute had affected global perceptions about the country.
The former alumnus of the University of Oxford, who was invited by the Blavatnik School of Government to speak to students about 'India's Challenges Ahead', was in the UK on his way back from the G-20 Sherpas Meeting in Moscow.
Ahluwalia also described the Supreme Court's decision to cancel the 2G telecom licences last year as a "blip" that would lead to clear and transparent rules for the sector.
"The telecom story is a good one. It is sectors
like energy and water that will prove crucial in terms of ensuring sustainable growth. It just takes a long time in India but in the next few years, the huge debates will centre around an intelligent use of national resources, which will require intelligent regulations and pricing in both these sectors," said Ahluwalia.
"The state of the world economy is a challenge. The focus of government policy is to re-assure foreign investors that India is wide open for business. India has the human resources in place and an expanding private sector. The only problem is the current account deficit. But the global financial system appears to be stabilising and the most important message is that India is a good bet for foreign investment and that message is getting across," he added.
Ahluwalia was described by the vice-chancellor of Oxford University Professor Andrew Hamilton as a "man of towering importance in recent Indian history".
"He is one of our greatest alumni and a very good friend and guide to the university on India and Indian issues," said Prof Hamilton, in reference to the former Rhodes Scholar who has also been conferred an honorary doctorate in civil law by the university.
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"The Vodafone case did not do us any favours. My personal view is that they knew very well that it (Vodafone's purchase of the Indian operations of Hutchinson Whampoa in 2007) was chargeable to tax, but they decided to take a calculated risk.