Recent Developments In India Aim To Encourage Foreign Investment

Appetite for foreign investment into India has cooled since the beginning of 2012, partly due to uncertainties in India's tax regime, and economic activity in general has slowed amidst the government's inability to implement economic reforms and a perceived "policy paralysis." However, there have been several encouraging signs over the last few weeks that the Indian government remains committed to creating an attractive legal and regulatory environment for foreign investment. As more fully described below, these include:

• Recent encouraging developments for investors looking to invest into India through the Mauritius route, including recommendations by a government-appointed committee that (i) recent retrospective amendments to Indian tax laws be made prospective in their application and limited in their scope, (ii) the implementation of the General Anti Avoidance Rules ("GAAR") be delayed and (iii) the validity of a Mauritius tax residency certificate be recognized;