Coal news and updates

SC coal ruling, Nokia exit worry foreign investors

The recent Supreme Court ruling that cancelled coal block allocations since 1993 has caused fresh jitters among foreign investors and overseas governments at a time when the Narendra Modi administration is trying to attract investment in the manufacturing space.

Government officials themselves acknowledge the concern, arguing that the ruling — along with Nokia's decision to exit India — will have some impact on investor sentiment, which is otherwise upbeat. To compound the issue, there are several other tax disputes involving foreign companies.

While foreign governments and companies have looked at Bilateral Investment Protection Agreements (BIPAs) as a safeguard of sorts, Indian authorities have failed to resolve their differences on the issue with the department of industrial policy and promotion arguing against the need for such treaties.

Deputy US Trade Representative (USTR) Wendy Cutler, who was in India last month to meet government officials ahead of a ministerial-level meeting, is learnt to have flagged the issue of protection of investor rights. Officials privy to the discussions told TOI that Cutler pushed for the long-pending BIPA, arguing that it is critical to instill confidence.

Similarly, Canadian authorities also flagged the issue of investor protection during their interactions, a senior government official said. The government has put on hold all BIPA signings till it finalizes the model text.

During a conference last week, where revenue secretary Shaktikanta Das asked India Inc about the need to move ahead, a Russian government official raised the issue of investor protection in the context of the Supreme Court order cancelling 122 telecom licences related to the 2G scam.

Another officer pointed to a ruling that has put the burden of higher compensation to land owners in Haryana on investors, including several Japanese investors who are complaining that the government did not alert them about the higher burden when they had invested more than a decade ago.

"It is difficult to explain to investors that the government can do little on judicial pronouncements, especially if it's a Supreme Court ruling," said a top-ranking official, conceding that there are concerns.

Source: The Times of India