Telecom Minister Ravi Shankar Prasad on Tuesday said Finance Ministry is looking into the resolution of tax disputes faced by telecom firms such as Nokia and Vodafone even as the new BJP Government looks at pepping up manufacturing to boost the economy.
Prasad, in his first formal press conference since taking over three weeks ago, said the Government is working on expansion of telecom services, incentives for chip-making units in certain cities .The Government identified eight cities where companies setting up such facilities will be eligible for incentives, including subsidy.
In addition, seven greenfield electronic manufacturing clusters will be set up and the Government will promote chip-making facilities in the country, Communications and Information Technology Minister Ravi Shankar Prasad told reporters.“Electronic manufacturing is going to be the key area of my priority...It is very much employment-based sector. We can give employment to 2.8 crore people,” the minister said.
Under the Modified Special Incentive Package Scheme (M-SIPS) notified in July 2012, refunds will be provided on capital expenditure for new units or for expansion of more than 25 per cent of existing capacity in certain greenfield or brownfield electronics manufacturing clusters.The scheme covers production of products across the value chain from raw material, components, design & chip, assembly, testing, R&D and packaging. The Government has allocated Rs 10,000 crore for M-SIPS in the 12th Five-Year Plan.
“We have selected eight new areas for M-SIPS. We have selected Ghaziabad, Vadodara, Ahmedabad, Gandhinagar, Nagpur, Nasik, Aurangabad and Thane...If someone sets up an electronic manufacturing facility here, they will be given subsidy,” the minister said.“The Government has been repeatedly sharing its concern that retrospective taxation is something that needs to be avoided. As far as resolution is concerned, as I told you, the Finance Ministry is looking in to it,” he said, referring to the tax disputes involving telecom firms.
However, he refused to comment on specific tax issues.Vodafone faces a tax liability of over Rs 20,000 crore over its 2007 acquisition of Hong Kong-based Hutchison Whampoa’s Indian mobile assets.