Vodafone tax row: cabinet approves conciliation

A vendor selling ''paani puri'', a traditional Indian snack, walks past closed shops displaying an advertisement for Vodafone in Jammu May 22, 2012. REUTERS/Mukesh Gupta/Files

The cabinet on Tuesday approved the start of a conciliation process with Vodafone Group Plc, a minister said, in a dispute over more than $2 billion in taxes stemming from its 2007 acquisition of mobile phone assets in India.

Last year, the Supreme Court of India ruled in Vodafone’s favour, saying that the UK telecoms carrier was not liable to pay any tax over the acquisition.

But the Indian government later in the year changed the rules to enable it to make retroactive tax claims on already-concluded deals, drawing criticism from global business groups.

Vodafone and Indian authorities have been in talks for months over the tax dispute, and Indian Finance Minister P. Chidambaram has said he is confident of a resolution.