Vodafone was an easy tax target: Arun Sarin

Interview with senior adviser, KKR

Arun Sarin, the man who got Vodafone Group into India as its then global CEO, stands vindicated since the tax case also originated during his tenure. Post the SC judgment, Sarin – currently a senior advisor to global buyout giant KKR -- spoke to Arijit Barman from California where he now lives... Edited excerpts.

You must be relieved?
Yes. This has been hanging for far too long. When a large MNC like Vodafone decides to come into India, they have to rely on the rule of law. And today, I feel vindicated as that rule of law has been upheld. So the rules do work in India. They judged it fairly.

Why do you think the tax department was so persistent?
The reason is the amount of money that was involved. World over, governments explore ways to increase revenues through taxes. But you tell me, where in the world do buyers pay capital gains? We were a large MNC coming into India, and hence an easy target. Without looking at the rules, the tax department went after us. But the main thing is the judiciary is a bedrock institution. Politicians will come and go, but the judiciary cannot.

Were you surprised at the tenor of the verdict?
Not at all. But India needs clarity, transparency to attract big investments. You tell me, our case was with FIPB for 4-5 months. They should’ve raised objections then and there. FIPB signed on the approval note and only after that the tax department came to us.

Wishing you were here in India today?
I am in California. But deep in my heart I knew this would’ve ended the right way.

Is this then the inflection point for Vodafone.
When in 2007 we came in, we had about 20 million customers. Today it’s close to 150 million. I am proud that I was part of the story from the very beginning.

But the regulatory environment is still very muddled?
I would tell the policymakers, don’t lean on just one sector for inordinate amounts of revenue. This is basic infrastructure. And lots of players are putting in billions to improve the quality of life for everybody. So be very careful with where you are heading with your policies.

But will you invest again in Indian telecom?
I have done enough investment in India with Vodafone. Let’s leave it at that for the moment.