Capital gains, everyone else loses

"In the Vodafone case, the Supreme Court has again made a wrong call on tax avoidance, setting a precedent that jeopardises thousands of crores of potential revenue for the exchequer."

The Hindu : Opinion / Lead : Capital gains, everyone else loses: Tax avoidance through artificial devices — holding companies, subsidiaries, treaty shopping and selling valuable properties indirectly by entering into a maze of framework agreements — has become a very lucrative industry today. A large part of the income of the ‘Big 5' accountancy and consultancy firms derives from tax avoidance schemes which flourish in the name of tax planning.

Many foreign institutional investors (FII) avoided paying taxes citing the Double Taxation Treaty with Mauritius. This treaty says a company will be taxed only in the country where it is domiciled. All these FIIs, though based in other countries and operating exclusively in India, claimed Mauritian domicile by virtue of being registered there under the Mauritius Offshore Business Activities Act (MOBA). Since there was no capital gains tax in Mauritius, most FIIs and most of the foreign investment in India, by 2000, came to be routed through Mauritius.

High Court rejected Vodafone's contention that the transaction with Hutchinson was not liable to tax. But in appeal, a Supreme Court bench headed by Chief Justice accepted Vodafone's claim. With such welcoming winks towards tax avoidance devices, it is unlikely that any foreign company would be called upon to pay tax or at least capital gains tax in future in India. Thousands of crores of tax revenue, and the future attitude of the courts towards innovative tax avoidance devices, will be shaped by these two judgments.

Our courts must send a clear signal that India is not a banana republic where foreign companies can be invited to loot our resources and even avoid paying taxes on their windfall gains from the sale of those resources.

Italy is wrong on sea law

"The shooting of Indian fishermen by Italian marines aboard the Enrica Lexie brings to the fore the need to understand the Law of the Sea as understood by seafaring nations"

The Hindu : Opinion / Op-Ed : Italy is wrong on sea law: The United Nations Conference on the Law of the Sea (UNCLOS), as quoted by the Italian authorities, to is taken out of context. So neither article 97 or Annexure III is relevant to this case.This case definitely does not come under any of the provisions of UNCLOS or any other convention connected with international piracy.

Killing someone is a crime; the accused has to face charges. But how and where must be decided by the authorities keeping in view diplomatic conditions.

The model code ain't broke

"UPA government's reported move to "look into the aspects where executive instructions of the Election Commission of India [are] required to be given statutory shape" smacks of a devious if ingenious way to curtail the powers of the supervisory body.

The Hindu : Opinion / Editorial : The model code ain't broke: The agenda note for the meeting of the Group of Ministers on corruption seems to have been drafted with the intent of taking out of the EC's purview any and all violations of the Model Code of Conduct."

The model code is central to the EC's efforts to prevent misuse of official machinery by parties in power, and to check electoral offences, malpractices and corruption during elections. It is essential that the need for change be shared by the EC and by political parties and that actual changes be the product of consensus between all stakeholders.

What politicians fear is the EC's hawk eye and its ability to deploy moral suasion. The model code may not be perfect but it certainly ain't broke. There is no need for the UPA to try and fix it.

All for trade, waiting for visa

"India and Pakistan have travelled quite far in improving trade relations, not to speak of breaking through the logjam of mutual hostility, mistrust and suspicion that had set in after the 2008 Mumbai attacks. "

The Hindu : Opinion / Editorial : All for trade, waiting for visa: Despite the continuing political pressures on the Pakistan government against normalisation of trade with India, the two sides signed three MoUs, on customs procedures, harmonising standards, and grievance redress in case of disputes between traders.

Pakistan cabinet's decision to grant Most Favoured Nation status to India has still not been notified due to the opposition stirred up against it by extremist and militant groups including the Jamat-ud-Dawa.

 It is disappointing, however, that the two sides have not yet been able to finalise a “liberal” visa regime, even for businessmen. It is futile to think of normalising trade, or of trade as a normaliser of relations, without first getting rid of the troglodytic visa system.

To IB or not to IB, that is the question

"India needs a National Counter-Terrorism Centre (NCTC) but it should be designed better."

The Hindu : Opinion / Op-Ed : To IB or not to IB, that is the question: Indian NCTC is to be given powers of arrest and searches as part of its preventive operations. Granting these powers to the IB through the NCTC mechanism could have two undesirable consequences. First, there may be allegations of misuse of the IB for harassing political opponents. Secondly, the IB's role as a clandestine intelligence collection organisation may get affected.

The IB will be preoccupied with defending its arrests before the courts and against allegations of human rights violations. Today, the IB enjoys protection from the Right to Information Act. If it has these powers and adds policing to its functions, it may no longer be able to enjoy this protection.

Home ministry should re-visit the proposed NCTC architecture in consultation with political parties and the States.

Say NO to death for drugs

"Handing down capital punishment for an offence that does not take life is draconian and violates all international human rights standards."

India has a long history of opium and cannabis use, especially in medicinal, spiritual and social contexts. Serving opium is an age-old tradition in many parts of the country that marks respect for guests. The Hindu : Opinion / Op-Ed : Say NO to death for drugs: Yet, this social propriety turned into legal impropriety with the enactment of the Narcotic Drugs and Psychotropic Substances Act (NDPS) in 1985, in order to comply with international agreements.

The NDPS Act prohibits cultivation, production, manufacture, possession, sale, purchase, transport, import, export, use and consumption of narcotic drugs and psychotropic substances, except for medical and scientific reasons, under license.


The United Nations Human Rights Committee (UNHRC) has held that drug trafficking is not the “most serious crime” under international law. In 1997, the UNHRC asked India to “limit the number of offences carrying the death penalty to the most serious crimes, with a view to its ultimate abolition”. Significantly, the United Nations Office on Drugs and Crime, the agency that oversees drug control measures globally has denounced capital punishment as a means to contain illicit trafficking and called upon Member States to abolish the death penalty for drug-related offences.

India has consistently ignored these opinions.Parliament is presently reviewing amendments to the NDPS Act. Will the rhetoric of ‘tough on drugs' prevail once again?

Latin America, India's next big thing?

"South-South cooperation will work again only if it is driven by economic opportunities rather than wishful thinking."

The Hindu : Opinion / Lead : Latin America, India's next big thing?: A combination of government initiatives and private ventures opened new vistas in India-LAC trade and investment, leading to an eightfold expansion in interregional trade.

We have come a long way since the days when India and some Latin American countries championed the cause of what was then called the New International Economic Order (NIEO) in the late 1970s and early 1980s. But there is little doubt that the challenge of making South-South cooperation work is once again at the top of the policy agenda — though this time driven by sound economic opportunities rather than by wishful thinking.

Fighting piracy on dry land

"Naval action isn't going to end piracy. For a durable solution, governments need to find ways to bring order to one of the world's most dangerous regions."

Failed by governments, merchant seamen have increasingly turned to using force to protect themselves. The Hindu : Opinion / Op-Ed : Fighting piracy on dry land. Somalia's pirate cartels have their roots in a failed state: the country has had no real government since 1991. Its economy is in ruins. Its coastal community felt the impacts of the collapse of the Somali state. Foreign trawlers began to prey on its fishing grounds with impunity, destroying a traditional source of livelihood. The flooding of the region with weapons led many young men to turn to the pirate cartels.

Experts say the pirate cartels now function much like modern businesses. A stock exchange to fund future attacks; banks to route ransom payments; firms to conduct negotiations and air-drop cash!

The massed guns of the world's navies have done relatively little to deter global piracy. The solution to high-seas piracy lies on dry land. Rebuilding Somalia's coastal villages, and bring order to the region, could provide a means to deny the cartels their sources of cadre and support — if governments can find the will and means to work in one of the world's most dangerous regions.

The tale of two Thakerays

Both Udhav Thakeray and Raj Thakeray, who are leading two successful parties in the recent civic poll elections of Maharashtra belong to the "tiger legacy" and have an affinity towards arts....

"But that's where the similarity ends", analyses Seema Kamdar.

While one is silent, composed and hard-working, the other belongs to the usual SENA brigade of aggression, vibrant and a sense of offensive attitude...

The tale of two Thakerays

The Dow side of corporate sponsorship

"U.N. guidelines are the yardstick to assess the human rights record of corporations."

Dow Chemical got it wrong if it thought when it acquired the worldwide assets of Union Carbide that it wouldn't have to deal with the legacy of the 1984 Bhopal disaster that killed thousands of people. The Hindu : Opinion / Op-Ed : The Dow side of corporate sponsorship

The liability of Dow with regard to the disaster in 1984 itself is not easy to establish, but activists and lawyers in India assert that Dow cannot escape responsibility for the ongoing contamination of ground water in Bhopal, and its health impacts.

The conversation about Bhopal has rightly focused on corporate responsibility, but it is important to remember the role of the Indian government as well. This case shows corporate failure to respect rights (Union Carbide), state failure to protect rights (Indian government), and the absence of an adequate remedy for victims.

Wider questions still remain — what sort of screening should be in place when selecting sponsors? Should only companies with a squeaky clean reputation be chosen? And if so, how is such reputation defined? The U.N. Guiding Principles on business and human rights — which provide the authoritative due diligence steps all companies need to take — offer a promising yardstick.

The Olympics represent the noblest of human efforts to strive towards higher standards. Organisers should aspire towards the highest standards when they undertake due diligence to select partners, in celebration of this ultimate test of human endeavour.