It is well know fact that India is not an easy place to do business.




One simple example to illustrate the fact that is most of India's biggest IT companies are least interested in doing business in India i.e. there more than 90 percent income comes from the Western market.

Even Vodafone executive admitted that India business difficult.

There are many reasons and among those biggest factors are uncertainty and corruption.

One can imagine about uncertainty issue in India from the basic fact that because of the rain in one state can force major companies to relocate (because of the incompetency in managing rain water).

Power sector company Enron uncertainty and harassment in India is a well known example in the mind of foreign investors.

Now Vodafone India facing uncertainty since the year 2007 because of the previous UPA government restrospective tax law despite India's new PM Modi assurance.

Indian tax authorities have sent notice to the Vodafone India along with warning that if due income tax of around 14,200 crore of rupees is not paid, its assets in India could be seized.

While Vodafone has said it doesn’t owe the Indian government money because the transaction was conducted offshore, however, Indian authorities have sought to collect taxes on the deal because it involved the assets in the country.

There are arguments both in favour and againts, however, uncertainity in doing business in India will only act as deterrant in attracting foreign investement in India.

In Jan 2016 while addressing the business leaders of France and India, Indian PM Modi said his government wants to ensure that foreign investors are clear about tax systems that will prevail in India over the next 15 years.

Over unpredictability in the tax regime, he said,"Retrospective tax is a matter of past. That chapter will not be opened again. We are ensuring that neither this government nor the future governments can open this chapter," Modi told the India-France Business Summit. "Whosoever makes investment in the country should know about the taxation system in the country over the next five years, 10 years, 15 years," he said.


Letter from the Indian tax authority seems to undermine India's PM statement and authority and will create uncertainity which will only deter foreign investment into India.

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