FII versus FDI

Given the tough budget constraint he faces, along with the formidable challenges posed by the high current account deficit and the falling rupee, it was always obvious finance minister Pranab Mukherjee would opt for FII in preference to FDI. While the tax loss due to tax benefits due to treaties such as the Indo-Mauritius one is put at $600 million a year, the tax loss on Vodafone alone, were the FM to give up the demand, would have been upwards of $5 billion, the total including others like SABMiller and AT&T would have been $7.5 billion.

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