Retrospective Tax is thing of the past, will never be opened again: PM Narendra Modi

Chandigarh: Prime Minister Narendra Modi Sunday announced that the controversial retrospective taxation is a thing of the past and this chapter will never be opened again in India, a statement aimed at addressing the concerns of foreign investors over predictability in the tax regime.

Addressing the business leaders of France and India here in presence of French President Francois Hollande, 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.

"I am for stable governance and predictable taxation system. The government is taking various steps to ensure this stability. This government is known for stable and predictable tax regime," he said.

In this context he referred to the Retrospective tax imposed in 2012 through amendments in the Income Tax Act, a step which had led to an outcry and anxiety among the investors, particularly the foreign ones.

"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.

The French President, who began his three-day visit from here today, is accompanied by a large delegation of CEOs.

Inviting French companies, especially those in the defence sector to manufacture in India and take advantage of low costs involved, the Prime Minister said India provides huge business opportunity for them.

"India wants to enter the field of defence manufacturing.... I assure French companies present here, especially in the field of defence manufacturing that we can do a lot in the area of defence manufacturing." 

"We are working towards improving quality of life. We are working on good governance. These are the two initiatives that world is attracted towards," Modi said.

India has witnesssed 40 percent increase in foreign direct investments and established itself as an important destination for foreign capital, he said.

The Prime Minister said India's ranking in the 'Ease of Doing Business' has improved by 12 points in a short span of time after his government took over.

"The inflow of 40 percent FDI in short period of time is a proof that the world has recognizes India as important destination," he said.

He said there are many opportunities to work on different fields between India and France. "It is like 'made for each other'. What you (France) have is our requirement and what you need is the market which we have," he said.

Seeking the assistance of France in improving country's infrastructure, rail network and innovation, Modi said, "Our development model requires the expertise of France. We have to move forward in infrastructure, rail, maritime, even waterways."

He said India also wants to play a significant role in a fight against global warming. "We want to reduce carbon foot print and move towards waterways," he said.

Modi added that his government was in the process of shifting its railways from diesel to electric mode.

"We want to strengthen the rail infrastructure. For 50 metro stations, we want to set up infrastructure and France has the capability (to do it)," he said.

Noting that Innovation was France's biggest strength, Modi said both India and France could work in this field.

Sharing the France President's concern over terrorism, Modi said that terrorism was a challenge for mankind and it has to be fought collectively by the world.

"You (Hollande) expressed concern that the way global warming poses problem for mankind. The same way terrorism poses a big challenge. France has shown the way to the world that terror attack which killed innocent people should not affect the development...within days of terror attack (in

Paris in September last), France hosted several world leaders for the Paris climate summit which was a brave act," he said.

He also appreciated the response of France's public and media in the aftermath of terror strike and said lessons needed to be learnt from it. 

Underscoring the need for eliminating terrorism, Modi impressed upon nations to come forward to fight this scourge.

"Fight against terrorism is work for humanity. Those who believe in humanity would have to fight against terrorism.

India and France believe in humanity and we will together and take the world together eliminate the mindset terror and terrorism and take forward the thoughts of humanity. India will stand shoulder to shoulder with France in the battle against terrorism," the Prime Minsiter said.

He appreciated the efforts of France in combating terrorism without deviating from its principles and journey of progress.

"Within days of the attack, France hosted so many world leaders. People, the media of France must be appreciated," he said.

Stating that defence is an important subject, he said, "now, it is not only about the battlefield. It has now turned into an issue of Cyber security which has become vital."

Sharing his government's intention to enter into defence manufacturing, Modi impressed upon representatives of French defence companies to forge alliance in this field.

"India and France can work together in the field of defence manufacturing," he said.

He said the combination of India's young talent and France's manufacturing capability could play very big role in providing security to the world.

"India's 65 per cent population is less than 35 years and man power is an asset which can be the reason for low cost manufacturing," he said.