'EU companies face taxation, licensing uncertainties in India'

MUMBAI: Uncertainties over taxation and licensing policies as well as a slow judicial process in India are areas of concern for European companies and investors here, a top European Union official said today.

"Certainly, uncertainty with regard to the conditions under which they (European companies) operate are issues that we are concerned with," EU Ambassador Joao Cravinho, leading a trade delegation to the country, told reporters.

"The uncertainty with regards to taxation regime has been devastating the confidence of European companies," he added.

These comments come against the backdrop of India and EU finalising Free Trade Agreement.

Cravinho, however, expressed optimism that FTA will be signed soon, saying that the broad-based trade and investment agreement will also be signed at the earliest.

He said there are other types of uncertainties such as licensing, which are more difficult to pinpoint because they might relate to certain local authorities. He added, however, that such challenges do not have an immediate solution and require time to get resolved.

"India is a complex country, we recognise that. But the time that the courts take to respond is also something that deters investors," Cravinho said.

"If you have a legal system that is capable of responding fairly quickly, these issues can be solved through legal system without problem," he said, adding that in such situations investors prefer to pull out rather than depend on the legal system to resolve problems if it takes years.

Welcoming New Delhi's move towards opening up of multi- brand retail to FDI, Cravinho pointed out however that there is a need to simplify the processes and conditions involved in setting up businesses.