Thursday, July 08, 2021

With Cairn getting hold of India's overseas assets, govt's problems may've only just begun

As India tries to come to terms with the court order allowing Cairn Energy to seize the first batch of overseas Indian assets, problems for the govt may have only just started.

Devas Multimedia, a company which is seeking over $1.2 billion it had won in a similar award against the government, is now likely to push for similar court-mandated measures following today's French order favouring Cairn.

Devas' sights are set on Air India, which it calls an "alter ego" of the Indian state. The company has already filed a case in US. It has asked Air India to pay the amount or forfeit its American assets like planes, cargo handling machinery and artwork.

If this appeal sees a favourable ruling, it would turn out to be a double whammy for the government. Besides losing Air India's American assets, it would also mean that the govt's long-delayed plans for selling the flagship carrier would face an even bigger roadblock.

More importantly, any more similar verdicts could critically hurt India's standing as an investment destination.

Last year, India suffered two big setbacks in international arbitration courts. One was the fight with Cairn, and the other was a $3 billion tax dispute with Vodafone Group. India has appealed both the rulings.

Devas and the Indian government are locked in a number of tussles. While Devas wants the award amount to be paid forthwith, India wants to liquidate the company and probe an (alleged) scam.

08/07/21 Economic Times

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