WASHINGTON DC: Finance minister P Chidambaram has said the government has not made any progress in renegotiating a contentious tax treaty with Mauritius and that the tax-related travails of MNCs such as Vodafone, Nokia or Shell made more news in India than abroad.
Speaking to ET after wooing investors in Toronto, Ottawa and Boston, Chidambaram asserted that the government will last its full term and would pursue significant economic reforms over the next 12 months.
These possible reforms, the minister said, include setting up regulators for the coal and road sectors and establishing an authority to fix railway tariffs.
"The Mauritius team that visited India did not have the authority or were not inclined to show any flexibility. So I am afraid it is back to the drawing board now," said Chidambaram, whose name is increasingly cropping up in political circles as a possible successor to Prime Minister Manmohan Singh should the Congress-led UPA return to power.
New Delhi has been pressing Mauritius to renegotiate the double taxation avoidance treaty to prevent misuse. The controversy is largely because of the widespread belief that a substantial quantum of Indian money — besides investments from other destinations — is being routed through the island nation into India, a phenomenon known as round-tripping, to avoid paying any capital gains tax on investments.
"We will have to sit down and discuss with MEA and others and find out how to take the process forward," Chidambaram said.
Elections 13 Months Away
Asked about the viability of reforms considering that political parties had sounded the elections bugle, he said: "I must be tone-deaf. I have not heard any bugle sound. Elections are 13 months away." "In fact, we have been elected to govern for five years and that means 60 months and I think we should govern until the last day of the term," he said.