French multinational Safran, the manufacturer of the M88 state-of-the-art engines fitted in the Rafale fighter jets acquired by India, says it asked the Indian government not to "penalise" the company on tax and customs matters.
During Defence Minister Rajnath Singh's tour of the engine assembly plant near Paris on Wednesday, company CEO Olivier Andries spoke of Safran's major investment plans for India but expressed a wish for the Indian tax system not to be "terrorising".
However, in what appears to be a case of lost in translation, the company later stressed that there had been a "misunderstanding" as the CEO was speaking out against a penalising tax and customs regime which was allegedly mis-heard as terrorising.
"For us it is obvious that we should have a maintenance repair and overhaul shop in India to serve our Indian airlines customers. But for that, we need to make sure that the tax system and custom system is not penalising us," noted the company statement, quoting the CEO.
"We would like to discuss this point with the government to make sure that it makes sense for us, versus an MRO (maintenance, repair and overhaul) shop that would be outside of India. Frankly speaking, we would like to develop this shop in India," the statement added.
At the conclusion of his three-day visit to France on Wednesday, Rajnath Singh had taken specific note of any tax concerns that foreign investors may have and told a gathering of top CEOs of defence manufacturing industries that the Indian government was open to any further rationalisation that may be required to facilitate the Make in India programme.
"For Make in India in defence if there is need for further tax rationalisation, it may be considered suitably, he said, as he extended an invitation for French companies to participate in the DefExpo 2020 being held in Lucknow next year.