New Delhi: Based on the recommendation of
the Foreign Investment Promotion Board (FIPB), the government
has deferred a decision the proposals of Analjit Singh and
Asim Ghosh to part-sell their minority stakes in Vodafone
On October 30 this year, the FIPB had recommended that a
decision their move be deferred as, among other things, the
Department of Revenue had objected to the proposals on the
ground of "treaty shopping", or tax avoidance, highly-placed
sources told agency.
In the domestic context, treaty shopping refers to cases
where investors use the Mauritius route to bring in
investments, taking advantage of the double-tax avoidance
treaty between the two countries.
Sources also said the Department of Industrial Policy and
Promotion (DIPP) has sought more time in taking a decision
saying that they are in the process of examining the same.
Meanwhile, the FIPB has directed the DIPP to examine the
comments of the Department of Economic Affairs (DEA), which
had held that the proposals `technically conform` to FDI
guidelines on the issue of "Indian control" of the companies
The DEA, however, is believed to have opined that the
numerous holding companies through which Singh and Ghosh hold
stake in Vodafone Essar, are all shell companies.
Singh and Ghosh want to sell 49 per cent each of their
holdings in these two investment companies that indirectly own
stakes in Vodafone Essar.