Kelkar plan on tax holidays to hit EOUs: Wisner

NEW DELHI: The Kelkar tax reform proposals which include the withdrawal of tax holidays of operations defined as export-oriented units (EOUs) can do severe damage to the offshore services industries of India, according to Frank Wisner, former US Ambassador to India and vice-chairman of the American International Group.
Speaking in a conference of US India Business Council (USIBC) he also pointed out eight areas of agenda for Indo-US economic activity which includes removing restrictions on foreign investment, privatisation and financial sector reform.
Addressing a gathering of USIBC organised by CII, he said that eliminating the tax holidays on EOUs would undermine the economic viability of many business engaged in processing, software, technology and engineering and manufacturing operations.
“From the standpoint of India’s foreign partners, India already is at a disadvantage compared with the tax policies of other developing countries. Repeal of tax holidays prior to their expiration in general sends a very poor signal about the reliability of India’s commitments to investors both foreign and domestic. Foreign companies, and even any Indian companies, will be forced to review the role of India in their globalisation strategies, including possible relocation of existing work to other countries,� according to Mr Wisner.
He also talked about eight critical points of action under the areas of priority for India where there are large economic interests at stake. These include:
* Speedy trade liberalisation
* Removing restrictions on foreign investment
* Increasing productivity and expanding opportunity through privatisation
* Financial sector reform
* Developing world class infrastructure
* Building up joint research in IT, engineering, biotechnology, and pharmaceuticals with stronger intellectual property regime
* Security of information pipelines tax and tariff reform.