Indian trade mission overshadowed by tax rows

Tax rows between big British businesses and Indian authorities threaten to overshadow a David Cameron-led trade mission to the rapidly-growing economy this week.

The Prime Minister hopes the delegation of business leaders will establish potentially lucrative relationships with their Indian counterparts so he can achieve an ambition of doubling trade between the two countries to £22bn by 2015. Mr Cameron has even revealed a preference for "medium-hot" curries and that he is a fan of cricket legend Sachin Tendulkar ahead of the trip.

More than 100 businessmen and women, about half of whom will be from small and medium sized companies, will accompany Mr Cameron as they look for ideas to develop areas such as IT and even encourage investment into the UK.

However, some businesses are cautious over trading with India following high-profile tax disputes between the government and Vodafone, the telecoms giant, and Royal Dutch Shell.

The state has tried to retrospectively tax Vodafone £1.4bn after its $11bn (£7bn) purchase of 67 per cent of the Indian arm of Hutchison Whampoa in 2007.

Shell is believed to have asked the British government to raise the issue of a revaluation of the tax the oil behemoth owes from a transaction back in 2009. Earlier this month, Finnish mobile phone group Nokia protested at actions by Indian tax authorities, including a raid on a factory in Chennai, southern India, as not meeting international standards.

Srikanth Iyengar, the global head of business development at Bangalore-based IT group Infosys, played down the tax rows. He said: "Clearly the Vodafone case study has caused some concerns in the media. But lots of UK Plcs have started looking at significant growth in India."

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