India Needs Course Correction to Lure Foreign Investment

May 10 (Bloomberg) -- Just because you can now go toDunkin’ Donuts in New Delhi, with the first Starbucks soon tofollow, doesn’t mean it’s morning for foreign investors inIndia. In fact, judging by some of the government’s recentmoves, dawn has been postponed by a few years.

Wednesday, India’s Finance Secretary R.S. Gujral toldBloomberg News that if plans to amend India’s tax law gothrough, Vodafone Group Plc will face a retroactive tax bill ofas much as $3.72 billion for its 2007 purchase of HutchisonWhampoa Ltd.’s Indian cellular operations. Changes to the lawwould override a decision issued this year by India’s SupremeCourt releasing Vodafone from any tax obligation, and they mightalso expose companies such as Kraft Foods Inc., AT&T Inc. andSABMiller Plc. to similar retroactive penalties and levies forprevious transactions.