Narendra Modi pledges stable tax policy to woo American business

NEW YORK/ NEW DELHI: Prime Minister Narendra Modi on Monday pitched for investments from some of the largest American corporations with the promise of a stable tax policy and an assertion that he wants to convert the Supreme Court ruling on coal block allocation into an opportunity to move forward and "clean up the past".
"It is my conviction that tax stability is essential for confidence building," said Modi, who hosted 11 CEOs for breakfast.The Prime Minister's comment on a stable tax regime comes amidst severe criticism of the policies followed during the UPA regime, including retrospective amendments to the law to claim taxes from Vodafone that acquired Hutch's telecom assets in India. Modi and his collegues have not shied away from referring to the policies as "tax terrorism".
His candidness extended to the coal block allocations as well since the court ruling is seen to be harsh by corporates as it impacts awards going back two decades and comes at a time when the government is keen to boost investor sentiment.
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The Prime Minister — who has given economic turnaround top billing in his scheme of things — told CEOs including Google chairman Eric Schmidt, Citigroup CEO Michael Corbat, PepsiCo's Indra Nooyi, GE's Jeff Immelt and drugmaker Merck's Kenneth C Frazier that the government is open to suggestions to speed up activity in Asia's third largest economy.
While hearing out the concerns expressed by business leaders, Modi assured them that his government would address the problems and try to make the overall environment more business-friendly. "India is open-minded. We want change. Change that is not one-sided. Am discussing with citizens, industrialists & investors," Modi was quoted as saying in a tweet by the MEA spokesperson.
He flagged infrastructure development as a key activity for overseas investors, arguing that it creates jobs and improves the quality of life. The government is keen to ensure that every village has 24x7 electricity supply, road development picks up speed again, ports have enough capacity to boost trade and airports are modernized.

In the past, tax administration and frequent changes in government policies have been cited as major hurdles to investing in India. In recent years, even Indian business houses have often shunned investing in the country and gone overseas. The Modi government is keen to revive the investment cycle and is wooing investors, especially in the manufacturing sector, although the PM made it clear last week that the government does not believe in doles and concessions to attract flows into the country.
Describing the meeting as "excellent and very good", business leaders said that the PM heard their concerns and listed out the government's priority areas. "He answers questions brilliantly and is very focused on improving India. So, we are thrilled to be working with him," Nooyi said.

Mastercard CEO Ajay Banga said Modi can execute plans like he did in Gujarat. "I have every belief he can do that. I believe then you can have a very good decade or ahead of growth in India and that would make every American investor happy to put their capital, technology and their people into India." Banga said Modi was focused on generating jobs for which there was need for improving manufacturing and tourism and infrastructure. "His view is that he will get those with clear policies as well as about willingness to execute and he made the point many times over and I think from his perspective of his focus and his energy around Asia," he said.
While Boeing CEO James McNerney, who met Modi separately, promised to "accelerate engagement with India", GE's Immelt said his company is looking to scale up investments.
"We discussed India. We are enthusiastic about the changes and the reforms in India and we are anxious to do our part in making India a better place," Goldman Sachs CEO Lloyd Blankfein said.
IBM CEO Virginia Romnetty reiterated her company's pledge to look at the possibility of investing in smart cities and Digital India as fund house Black Rock said it will host a global investors meet in India in early 2015.