India is planning new legislation to safeguard foreign investment by offering relief from possible policy changes but will uphold the state's right to tax them, as the country aims to attract more capital from overseas.
In a 40-page initial draft, the finance ministry has proposed appointing a mediator and setting up fast-track courts to settle disputes between investors and the government, a source told Reuters.
"The idea is to attract and promote foreign investment, but a major issue for investors is the enforcement of contracts and speedy dispute resolution," said the official.
A major issue for investors is the enforcement of contracts and speedy dispute resolution"
A separate internal government document which analyses the draft law noted that taxation issues were of "great interest" to investors and excluding it from the law's purview could reduce the proposal's intent to boost their comfort level, Reuters reports.
Still, the document defended the exclusion, saying "the power to tax is an integral part of the state's police powers even recognized in international law".
Several firms including IBM, Royal Dutch Shell and Vodafone have collectively faced billions of dollars in tax claims from India's government in recent years, leading to arbitration cases and protracted legal battles in courts.
A spokesman for the finance ministry did not respond to a request for comment.