New Delhi, September 1
In a move that will cheer the stock markets, the expert committee on General Anti-Avoidance Rules (GAAR) headed by Parthasarathi Shome on Saturday recommended deferral of the contentious anti-avoidance tax provisions by three years.

The draft report, which was submitted to the finance ministry, has also sought comments from the stakeholders by September 15. The Shome committee was set up by Prime Minister Manmohan Singh to address the concerns of foreign investors to hold widespread consultations and offer more clarity.

The panel said investor confidence had been hit by the GAAR provisions and suggested that GAAR provisions should not be invoked to examine the genuineness of the residency of entities in Mauritius.

The committee report said GAAR should be deferred for three years but the year 2016-17 should be announced now. “In effect, therefore, GAAR would apply from assessment year 2017-18. Pre-announcement is a common practice internationally, in today’s global environment of freely flowing capital”, it said.

Introduction of GAAR, which was proposed by then finance minister Pranab Mukherjee in the 2012-13 budget to check tax evasion through tax havens like Mauritius had unnerved foreign investors and since then inflows into Indian markets have slowed down. Following protests, its implementation was postponed till April.

The committee in its draft report said Mauritius is the most preferred route for foreign investments because of the liberal taxation regime in the island country. India has a double taxation avoidance treaty with Mauritius.

The finance ministry has also expanded the scope of the terms of reference of the committee to include all nonresident taxpayers instead of only FIIs.

Industry has welcomed the panel recommendations. CII director general Chandrajit Banerjee said the postponement in introducing GAAR was most welcome. CII said the report addresses the issues of grandfathering of existing tax incentives and concessions and independence of the GAAR approving panel.

FICCI president R.V. Kanoria said the panel has taken a pragmatic and practical view in recommending a deferral in the implementation of GAAR at a time when business sentiment desperately needs a boost.

New Delhi, September 1
In the last few weeks, Ratan Naval Tata, chairman, Tata Sons and head of India’s largest business group, has seen saying goodbyes to shareholders at the AGM of leading Tata group companies.

Tata steps down as chairman of the Tata group in December this year when he turns 75. He will be succeeded by Cyrus Mistry, son of construction magnate, Pallonji Mistry, the largest shareholder in Tata Sons, the holding company of the group. Mistry was chosen in December and for a year will be groomed by Tata to ensure a smooth transition given the size and complexity of the group.

Tata’s tenure that began in 1991 has seen a 14 times growth in the size of the group, both through organic growth and acquisitions. The revenues of the group were at $ 5.8 billion in financial year 1992 which Tata has transformed into a salt to software global conglomerate with diverse businesses with revenues of more than $ 83 billion for financial year 2011 and more than 4.25 lakh employees. The latest figures for financial year 2012 are not yet out and they will be out only by September-October. The scale of globalization can be gauged from the fact that more than 58 per cent of the group revenues come from outside India.

The Tata group has scores of leading companies under its umbrella like Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages (formerly Tata Tea), Indian Hotels, Tata Communications, Tata Teleservices, Titan and Voltas.

Succeeding JRD Tata, the legendary Tata group chairman in 1991 was neither smooth nor easy. The initial years of Ratan Tata’s stint saw bitter and very public battles with the satraps of the Tata empire: Ajit Kerkar in Indian Hotels, Darbari Seth in Tata Chemicals and Russi Mody in Tata Steel accompanied by whispers of corporate rivalry at play. This writer, having just become a business journalist vividly remembers the raging controversies at that time.

Among Tata’s biggest imprints on the group are globalization and providing a unified umbrella and group identity to the diverse companies. Tata has ensured that the group is more cohesive and companies work in line with a central vision and identity rather than being a loose set of companies bearing the Tata brand. There has also been a restructuring of businesses, exiting some and creating scale in others.

In the initial days, the Tata shareholding in the group companies which is held through a trust was very low unlike other family owned companies which have a substantial shareholding. Ratan Tata has ensured the holding was increased over the years to thwart any takeover threats.

Having restructured the group and made it more focused on scale, Tata has gone onto creating new ones like entering telecom through Tata Teleservices. Among his firsts was designing and launching the Indica, India's first indigenously developed car, taking TCS public, which is now one of India’s most valuable companies. In recent times, the group has been trying out the concept of frugal engineering, best showcased through the launch of the Nano, the world's cheapest car. The Nano however ran into a controversy over the Singur plant in Bengal which was later abandoned. However, the jury is still out on the Nano’s success but the group is trying out the concept in other businesses.

The strategy of big ticket global acquisitions has been the driver of the group’s growth.